A review of the current mortgage market by Legal and General shows that the fixed rate mortgage is still very popular with consumers despite the recent rate rises they have experienced.
Legal and General have looked at the differences in mortgage choices between Quarter 1 and Quarter 2 of this year, seeing where the key trends are. Fixed rate mortgages fared very well, going up from 35 percent of the market in Q1 to 58 percent in Q2. This was achieved even though interest rates went up, on average, to 6.51 percent from 5.87 percent on the popular 2 year fixed rate mortgage.
The market for mortgages is going to remain very keen on fixed rate products it seems due to the expectation of increased mortgage costs in the future. House buyers want a level of security say Legal and General, something that a fixed rate mortgage provides as the repayment amount will not be affected by base rate changes.
According to new research many homeowners are not taking an active role in understanding and managing their mortgage.It has become clear that many homeowners do not understand the fundamentals of their mortgage and this is stopping them to achieving savings.Many homeowners tend to forget about their mortgage deal and just see it as a one off purchase to aid in them buying a property. But they are in fact missing out on saving a lot of money by not taking a more active role to learn and understand fully about mortgages. Research found that a large majority of mortgage payers did not even know what interest rate they were currently paying on their mortgage deal. This lack of interest by these homeowners could cost them a fortune in years to come if they do not take more interest in their finances. Knowing when to switch mortgages deals at the right time to get a lower rate of interest can save homeowners thousands of pounds. See our mortgage comparison table for more information or our guides and tips pages.
As of 17 June the Nationwide Building Society mortgage rates will be increased by up to 0.5 percent on a number of their products.
New customers taking fixed rate or tracker mortgages, as well as those remortgaging, will face higher interest rates, a situation that the nationwide Building Society is blaming on the increased cost of borrowing between financial institutions. Looking at the broader picture the interest rate on a 2 year fixed rate mortgage with a five percent deposit is around 1.4 percent more than it was just a year ago.
A Nationwide Building Society spokesman defended the changes, explaining how their costs had increased and left them with no other option but to pass on some of that cost to their customers. They were not alone in increasing their rates either, with many other big name lenders increasing their rates too.
