Homeowners prefer fixed rates

Despite suggestions that the Bank of England will choose to reduce the base rate in the near future, many borrowers would choose a fixed-rate mortgage of five years or more if they were to renew their mortgage now, it has been claimed.

A survey by Abbey Mortgages found that one in three homeowners would opt for a fixed-rate deal over a term of five or more years, while six per cent of borrowers would opt for a ten-year term.

The firm noted that 65 per cent of people who prefer fixed-rate deals said that they like to be able to see how much their monthly expenses would be.

Nici Audhlam-Gardiner, head of mortgages at Abbey, said that it is "understandable" given the size of the financial commitment that people want to know how much they will need to pay each month.

"You never know what''s going to happen in the future, but at least if you''ve committed to a long-term fixed deal, you know where you are going to stand with your repayments," she remarked.

Drew Wotherspoon of John Charcol recently said that many commentators predict that the base rate will fall by half a percentage point by the end of next year.

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