Should you consider a two-year fixed-term or even five- or 10 years?
Following a surge in lending in January (homeowners borrowed more than in most months since the financial crisis), there was an expectation that house prices increases would slow down.
However, instead, house price growth accelerated in February.
One of the knock-on effects of this is that borrowers who are looking for cheap, fixed-rate mortgages need to move fast. There is a good chance they will become more scarce.
If you are sitting on a variable rate mortgage (with no penalties for an early exit) you could take advantage of a cheaper deal, and first-time buyers also have fixed-rate options, but you need to act while there are a good range of choices available.
Over recent years, the mortgage rate drop and the fall in numbers of borrowers meant lenders had to work hard to attract customers, so they got creative with their product portfolio. On the other hand, the financial crisis meant they got stricter on their lending criteria too.
The picture is now changing, and lenders are relaxing their criteria, including showing a willingness to lend with smaller deposits. It could well be that the cheaper fixed-rate deals start to disappear too.
Many borrowers coming to the end of their fixed-rate term will find themselves rolled onto standard variable products. They too need to consider a new fixed-rate product.
Should you consider a two-year fixed-term or even five or 10 years?
Historically, the shorter the term, the lower the rate, so to keep mortgage payments down two-year deals have been popular. But recently the longer-term fixed price products have also become more competitive on rates.
A lot depends on whether you are willing to be tied into your mortgage and for how long. For some, the security of a fixed rate is invaluable.
When considering a fixed-rate mortgage, don’t just look at the rate. There can also be extra charges such as arrangement fees that you need to measure, too.
If considering all this “puts you in a fix”, then fear not. We can guide you through the options and make sure your fixed term mortgage doesn’t lead to you becoming financially “unstuck”.