Homeowners prefer security of fixed-term
Abbey Mortgages has conducted a survey of homeowners which shows that nearly one-in-three, or 5.1 million people, would prefer to fix the interest rate on their mortgage for five years or more.
The survey participants were asked about their preferences on the basis that they were renewing their mortgage at the current time.
With the Bank of England base rate expected to be cut by the end of this year or in early 2008, the results of the survey were surprising.
Fourteen percent of respondents said they would opt for a five year fixed-term, if remortgaging today.
Six per cent would be happy to fix for 10 years and 9% would fix for 15 years.
Of the 8.8 million people who favoured a fixed-rate mortgage, 5.7 million (65%) stated that they want to know exactly what their monthly outgoings would be, regardless of the possibility of changes in the Bank of England base rate.
Abbey carried out a similar survey during the summer, when 40% of respondents said they would opt for a 2-year fixed term.
In the space of a few months the figure has reduced to 12% of the home-owning population.
In the current survey, the popularity of tracker products was also highlighted, with 12% of respondents preferring this kind of loan.
However, 8% of respondents, or 700,000 people, said they didn’t understand how tracker mortgages worked and for this reason would opt for a fixed-rate deal.
Finally, forty-nine per cent of respondents would opt for a fix-rate mortgage because they expect interest rates to increase in the next two years.
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