Two-year fixed mortgages "don't make sense"

An expert has advised homebuyers that they are better off taking out products with mortgage rates fixed for five years.

In an interview with the FT Money Show, Ray Boulger, senior technical manager at John Charcol, said that five-year fixed rates make more financial sense than two-year deals.

He explained that most people take out a fixed deal because they want the security of regular monthly payment and the help it provide for budgeting.

However, with a two-year fixed rate, people are locking themselves into paying over the odds and when their deal ends they will by faced with taking out another fixed deal at a higher rate or a higher tracker.

"For the majority of people, I don't think a two-year fixed makes sense. Either a life time tracker of a five-year fixed will make more sense," he said.

Barclays recently reduced its mortgage rates across many of its products, focussing on its two and three-year fixed deals.

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2011-06-03 12:55:33 © Moneyextra.com