New research from Abbey Mortgages has found that almost one-in-three homeowners, 5.1 million people, would opt to fix their interest rate for between five and 15 years when remortgaging, despite the fact that interest rates are widely predicted to decrease over the next year.
Demand for five year fixes even outstripped the usually popular two-year fixes. In summer, over 40 per cent said theyd opt for a two-year fix, whereas just 12 per cent of the home-owning population would now choose this option. Trackers were slightly up in terms of popularity, also at 12 per cent, however this is still lower than the demand for five-year fixes.
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Why do people want to fix?
Amongst the 8.8 million people who favoured a fix, 5.7 million stated that regardless of the Bank of England base rate, they would like to know exactly what their monthly outgoings would be. A lack of understanding of tracker mortgages amongst homeowners was also identified, with around 700,000 saying that they preferred to fix because they didnt understand tracker mortgages.
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Nici Audhlam-Gardiner, Head of Mortgages at Abbey said: For most of us our mortgage is the biggest financial commitment we make so its understandable that we want to know just how much were going to have to fork out each month.
You never know whats going to happen in the future, but at least if youve committed to a long-term fixed deal, you know where you are going to stand with your repayments. Borrowers need to be sure however that the deal they take out is right for them and that they understand the different types of mortgages available before signing up to anything.
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