Fixed mortgage rates remain 'comparatively high'

Fixed mortgage rates are still "comparatively quite high" as a result of lenders not reducing their margins, according to What Mortgage.

The comments from What Mortgage come after first direct revealed that consumers looking for the best mortgage rates are beginning to turn towards fixed-rate mortgages as many experts predict interest rate increases.

Ben Wilkie, editor at What Mortgage, said that lenders are not reducing fixed rates despite interest rates remaining at an all time low as the market is not as competitive as it once was.

Mr Wilkie believes there is a large gap between interest rates and fixed-rate mortgages and an increase in interest rates may not lead to a rapid increase in fixed mortgage rates.

He added: "A lot of people are thinking that if the market gets more competitive, then the actual rates won't rise that much; it is just that the margins that lenders charge will get smaller."

Research from first direct found that 25 per cent of mortgages sold in 2010 have been on a fixed-rate and the most popular of these has been the two-year repayment version.
 

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2010-12-01 13:42:45 © Moneyextra.com