New home buyers are certainly learning from the current credit crisis and are now seeking long term fixed mortgages. The trend over the past few years has been to get a fixed mortgage with a fixed rate for two years, after which it changes to a variable rate. This plan however landed many homeowners in hot water after they found out their rates went too high to make their payments. Borrowers are now hoping to get a five year fixed mortgage at the very least, and prefer one that is much longer.
Ray Boulger, of John Charcol, the mortgage broker, said: “Two-year fixes will be less popular as arguments for not taking one out outweigh those in favour. People will want to wait until the credit crunch subsides and interest rates fall further.”
David Hollingworth, of London & Country, the mortgage broker, said: “Longer-term mortgages are potentially a viable solution, and we could see the popularity of two-year fixes wane.”
Louise Cuming, of Moneysupermarket.com, the online price comparison service that compiled the figures, said: “Five-year fixed rates are becoming a lot more popular. This tends to be a good compromise, as borrowers are not tied in for too long.”
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