Consumers finding it harder to get a good deal on morgages
It seems that the fifth interest rate rise in the space of a year has seen affordable variable rate mortgages start to slip away from the grasp of consumers that are desperate to get onto the property ladder, according to recent reports.
One broker has reported that variable rate mortgages have now started to go the same way as fixed rate mortgages, in that the rates are becoming less and less attractive, and consumers are finding it increasingly difficult to get an affordable deal. This follows the fifth interest rate rise in a year, which took the base rate up to 5.75%, its highest in six years.
The broker, from firm John Charcol, stated: 'Unless you've been on the moon recently, you can't have missed reports of the great fixed rate disappearing trick over the last few months. 'Many deals have come and gone in the blink of an eye giving borrowers little opportunity to take them up. That said, the current crop of fixed rates have been around for longer than most, with two-year swap rates maintaining their current level, around 6.3%, for a few weeks now. The problem is, they just look expensive.'
He added: 'However, the gap between fixed and variable rates has shrunk over the last week, with all the variable rates that were at least half a per cent below bank rate being withdrawn. With these going, it really is a case of 'size matters', with some deals offering lower rates with big fees, and others offering more modest fees but slightly higher rates.'
Consumers are now being urged to look at the long term picture, and with a further interest rate rise predicted this year many may prefer the stability of a fixed rate mortgage even though the rates may be higher than the variable rate deals. The margin between variable and fixed rates is narrowing, state officials.
Tom Smith
31st July 2007
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