Homeowners Shown To Be Looking For Security
Numerous Britons are looking towards protecting their finances for significant periods of time, a new study reveals.
Research carried out by FairInvestment reveals that more than one in three homeowners (37 per cent) would take out a 25-year fixed-rate mortgage deal. Meanwhile, an estimated 28 per cent of respondents state that they would choose a medium-term product, with one in four deciding that a short-term fixed-rate deal is for them.
By selecting a fixed mortgage deal, it is possible that consumers can keep their level of mortgage repayments regardless of any base rate changes. This could assist them with keeping up with demands on their spending in areas such as personal loans, plastic cards, household bills and transport costs.
On the other hand, six out of 100 people questioned claim that they would avoid taking out a fixed-rate deal.
The study comes after Alistair Darling, chancellor of the exchequer, reported that Britons should have the choice to take out “flexible and affordable” fixed-rate mortgage deals. In his pre-Budget speech he stated that there should be more opportunities for consumers to get products which last for up to 25 years. Mr Darling added that at present most people have short-term deals. Lasting for either two or three years, the politician claimed that those taking out such deals are leaving themselves at risk of interest rate increases upon the expiry of their mortgage contract.
Commenting on the figures, James Caldwell, director at FairInvestment, said: “The fact that the majority of people would go for a long or medium-term fixed-rate mortgage is reflective of the country’s nervousness regarding the current economy and the credit crunch. At the moment, households are suffering from soaring mortgage repayments as they come off their fixed-rate deals and some might even lose their homes because they cannot keep up with the payments. A long-term deal can provide people more security by reducing the risk involved with having a mortgage, which is particularly important for families with low incomes and for first-time buyers, who often have no or little equity.”
Mr Caldwell added that if interest rates continue to go up then people who have opted for a fixed-rate mortgage will be “protected from such fluctuations in the economy”. However, the director added that should the Bank of England’s monetary policy committee choose to continue cutting the base rate of interest then those who have selected a fixed-rate will not benefit from the reductions. On the other hand, homeowners who have taken out a different kind of mortgage deal, which could include a tracker or variable-rate product, were indicated as benefiting.
Those consumers who are looking to further safeguard their financial future might wish to consider getting a loan. By taking out a low-cost loan borrowers may find that they are able to meet numerous constraints on their spending quickly and effectively, leaving them with an affordable level of repayment to make each month. Applying for a loan may also be of assistance to those looking to meet the cost of repairs to their home. Recently-released figures from Abbey Mortgages revealed that during the space of seven days in early March, claims for storm damage to property rose by 55 per cent. In addition, the typical claim for flooding damage to a home last year was indicated as standing at 15,530 pounds.
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