The popularity of variable-rate mortgages is on the rise
The popularity of variable-rate mortgages is on the rise.
Consumer interest in variable rate mortgage products is on the rise in the UK, according to a recent survey, following a time when customers tended to avoid variable rate products in favor of more reliable, albeit more costly, fixed-rate deals. Between August 2006 and July 2007, the Federal Reserve raised interest rates five times, causing many homeowners to want to remortgage to fixed-rate deals in order to prevent the consequences of future rate increases, as well as first-time buyers opting for fixed rates to avoid the pitfalls of increasing repayments over the first few years of mortgage repayments.
The Bank of England, on the other hand, has maintained interest rates at 5.75 percent since July of this year, with the most recent decision to keep rates steady coming only last week. The Bank of England's decision to keep rates on hold is believed to be influenced by the potential impact of the global credit crisis on the UK economy, prompting the bank to take a wait-and-see approach. According to state experts, another justification for keeping rates on hold, for the time being, is that CPI inflation is now below the government's target of 2%, coming in at 1.8 percent, the lowest level in a year.
Consumers in the UK have revived interest in variable-rate mortgages as analysts and economists predict that the Bank of England will not increase interest rates again for the rest of the year, with many breathing a sigh of relief that repayments will not be impacted by more interest rate increases this year. This revived interest has been fueled by new expectations that interest rates will fall by the end of the year, with many analysts expecting – or urging – the Bank of England to do so. Many economists now predict that interest rates will drop by at least a quarter-point by the end of the year.
Fixed-rate mortgage interest reached a new high recently, as homeowners and first-time buyers scrambled to find a solution to the issue of increasing repayments due to interest rate hikes. However, some analysts have forecast that interest rates will drop to about 5% by the end of next year, so many customers will want to avoid locking themselves into more costly fixed rate deals for fear of paying significantly more in six or twelve months.
Comments
Post a Comment