Long term fixed rate mortgages cost homeowners

Cautious homeowners who opted to set their mortgage up on a long term fixed rate are losing significant amounts of money each year as interest rates continue at all time lows. Just three years ago a long term fixed rate was still a popular choice amongst home buyers. These mortgage products gave peace of mind as they payments were fixed for a prolonged period, typically five or 10 years, often even longer. Former Prime Minister Gordon Brown championed longer-term fixed rate mortgages when he was Chancellor, believing that they reduced volatility in the housing market and offered help to lenders for the ...

Fixed mortgages worthwhile when interest rate hits 3.25%

Interest rates need to be pushed up by 1.75% for mortgage holders to benefit from switching to fixed rate deals. Swapping variable mortgages for fixed rate alternatives too soon will prove more expensive to borrowers. Locking into fixed rate mortgage deals will not be worthwhile for consumers until interest rates rise to 3.25%, new figures suggest. Many borrowers are facing a difficult decision on whether to take up a fixed rate mortgage to safeguard against future rate rises. Home owners with variable rate mortgages would see their payments shoot up in line with any increases - they are worried that the Bank of England will hike up rates in a bid to curb inflation.

Homeowners advised to prepare for interest rates of 5% by MPC

Mortgage borrowers need to bear future interest rate rises in mind to help them better cope with an increase in repayments. Interest rates will return to normal and homeowners should prepare for their mortgage payment to rise according to a Bank of England staff member. Householders have been warned to prepare for a tenfold rise to the record low 0.5% interest rate by a member of the Monetary Policy Committee. Paul Fisher said that interest rates will have to go back up to the standard position of around 5%. He told The Daily Telegraph that the MPC hopes that "people are aware that interest rates at some point will go up again and that they will head back to a normalised position. What [the committee needs] to do is to trigger the mindset in people that that’s where rates will eventually go back to".