Homeowners seek peace of mind in fixed-rate mortgages
Many homeowners are opting for peace of mind over cheaper monthly repayments, an industry expert noted this week.
Jacqueline Thornton, financial planner at Re-Financial Planning, said most homeowners are choosing fixed-rate mortgages rather than saving money by moving to a lower-cost standard variable rate (SVR) deal.
Mortgage broker John Charcol recently reported 83% of its clients opted for a fixed-rate mortgage in June.
Thornton said: “A lot of our clients are coming back saying that peace of mind is more important than the money saved now by being on a standard variable rate.”
However, Thornton said mortgage providers have “cottoned on” to homeowners’ concerns and are making fixed-rate mortgages more expensive.
She advised homeowners choosing a fixed-rate deal to seek good value by locking in to a long-term fixed-rate deal of at least five years.
The preference for security comes despite Gerard Lyons, chief economist at Standard Chartered Bank, predicting that the current climate of low interest rates will continue until at least 2013.