Twenty five year fixed rate mortgage from Nationwide
There is some good news for property purchasers looking to take out a fixed rate mortgage, with the Nationwide Building Society now offering a mortgage with a fixed rate of just under 5.5% over e term of25 years.
Since the Bank of England too interest rates from 4.5% last July to 5.25% with three rises in the space of six months, more and more people have been turning to fixed rate loans for their mortgage needs.
The Nationwide has now introduced a mortgage over a twenty five year term with a fixed rate of 5.49%. Most fixed rate mortgages are for limited periods of between two and five years, after which time the mortgage rate reverts back to the variable rate.
With this type of fixed rate mortgage deal borrowers can enjoy stability and easier financial management throughout the term of the mortgage without the worry of increasing repayments if the interest rates continue to rise.
Indications from recent information suggests that these mortgages could prove popular, as more and more first time buyers are turning to fixed rate mortgages in order to make it easier to budget and to avoid the pinch of future rises in the interest rate. However, another company in the US also offered a twenty five year fixed rate in the past and this did not really prove that popular.
A spokesman from the US lender said : "We didn't know how much demand there would be for 25-year fixed-rate mortgages, so we decided that the only way to find out was to launch one. There was no great demand."
In the past the HSBC also launched an extended fixed rate deal, with a fixed rate for ten years, which also did not prove all that popular.
An official from HSBC said: "Borrowers can just about visualise what they will be doing in five years. Over 10 years or longer they find it more difficult and don't want to be locked into something with redemption penalties in case their circumstances change."
Tom Smith
10th April 2007
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