Despite the problems caused by variable rate mortgages, more consumers are interested in short term fixed mortgages. It is believed that the current high interest rates may be spurring this trend. Few wish to get locked into a fixed mortgage with sky high rates and they are taking that chance that within two years or less the rates will drop to a much better level. However, there are risks for homeowners seeking short term fixed mortgages, as the current housing crisis has illustrated and experts are urging caution to those that are seeking a brief fixed mortgage. As foreclosure rates swell, it is easy to see why this may not be the best choice for many homeowners, despite high rates at this time.
Melanie Bien, director of independent mortgage broker Savills Private Finance, said: “Rising mortgage and other living costs are behind the increase in repossessions as people struggle to pay the bills.
“The situation is likely to get worse with rising food, fuel and mortgage costs as borrowers come off relatively cheap two-year fixed rates and remortgage onto more expensive deals or onto their lender’s standard variable rate until pricing comes down.”
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