The latest research shows that those looking for a two year fixed rate mortgage may have to pay a higher interest rate than they have in the past. Research by Moneyfacts has revealed the average rise added up to around 0.09% more by 30th April 2014 than it was on the first day of the same month.
Fastest rate increase for two years
The last time we saw an increase of more than the 0.09% revealed by this research was a little over two years ago, in February 2012. This was when we saw a rise of 0.13% over the same one month period.
It means those who are searching for a good mortgage deal need to be even more careful to look for a deal they can afford, and one that is competitive in the marketplace.
Is this the time to look for a good deal on a fixed price mortgage?
The short answer is yes. Many experts take this news as a signal to find the best quality fixed rate mortgage on the market at the moment. Delaying could mean paying even more if the rates continue to rise in the near future.
The variable rate mortgages have sometimes been better value than the fixed rate ones in the past. However this is not the case at the moment. For people who are currently on a variable rate, the increase in the fixed rate deals rates means it is a good idea to see if a better deal can be sought.
How many people are vulnerable to potential rises in interest rates?
Since many people finish a fixed term mortgage deal and then switch to a variable rate, it means there is more potential to be caught out by rising rates. Recent data has revealed that as many as two thirds of mortgage holders could be in this situation.
Even though the deals on fixed rate mortgages didn’t look as attractive at the end of April as they did at the beginning, they are still far from reaching the level they could reach in the future if interest rates rise. This is the time to secure the best deal on a fixed rate over two years, because if we see continual rises in rates over the space of a month, many homeowners on variable rates will start paying a lot more for their mortgages each month.
According to statistics, some 80% of new mortgages are of the fixed rate variety. This means that 20% of those who get a mortgage are still opting for the more uncertain waters of the variable rate mortgage.
Either way, interest rates are looking more likely to rise in the near future rather than staying at their present levels. It may well mean fixed rate deals have higher interest rates in the near future too, which means there is less chance of potential homeowners finding the best deals they can possibly get.