February 23, 2010
Happy Birthday Fixed Rate Mortgages – Is It The Right Choice For You?
The fixed rate loan has been around in the UK for 21 years now and it has become one of the most reliable and popular home loans around – but is it the right choice for you?
Halifax, which was one of the first providers of fixed rate loans in 1989, says there were 12 fixed rate products from 12 lenders back then compared to over 1300 fixed rates from 69 lenders today. According to the Council of Mortgage Lenders figures, 68% of new mortgage lending was on fixed rate products in 2009. In 21 years the fixed rate has grown in popularity and in its ability to deliver the right results to borrowers.
In the late eighties interest rates rose to 13% and people were struggling with their mortgages, most of which followed that high rate. But the introduction of a new product revolutionised everything by introducing a level of stability, choice and competition into the market. Those first borrowers marveled at the ability to lock in a rate for a number of years, keeping them safe and secure.
Stephen Noakes, mortgages commercial director at Halifax, says: "In today's market, borrowers can select their product based on a number of factors – including the term, type and rate. It's easy for us to take that level of choice for granted, but before the introduction of fixed rates, borrowers simply didn't have access to the same options. Ever since their introduction 21 years ago, fixed rate mortgages have been fundamental for homeowners looking for certainty and stability in managing their household expenses, and this is an important milestone to mark."
Innumerable borrowers have, over the last 21 years, been able to comfortably live within their means thanks to fixed rate mortgages. They were able to budget, look forward and take control of their finances.
So is a safe, reliable fixed rate the best choice for you now? It's a very different market to that of 1989 – there are many more variations of mortgages and the rate is at an all time time low of 0.5%. But that doesn't mean that a fixed rate isn't the best choice for you, you'll just have to ask a mortgage broker to be sure.
SOURCE: CML, Feb 2009, Halifax, 20/02/10
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