Homeowners Need ‘Right Deal’ For Them

Homeowners are looking to take steps to reduce pressure on their finances, a study indicates.

Research carried out by Abbey Mortgages as part of its monthly Remortgage Tracker study shows that just under one in three (31 per cent) homeowners would get a fixed-rate mortgage if they had to remortgage their home. Out of the total 10.3 million people looking to do this, some 1.8 million (six per cent of all homeowners) would opt for a 15-year fixed-rate deal, with this proportion rising to 2.4 million (seven per cent) for consumers wanting a ten-year offer. Overall, fixing payments for two years is the most popular length of time people are looking for accounting for eight per cent of mortgage-holders’ choices. In addition three and five-year deals are sought out by three and seven per cent of those questioned respectively.

And in keeping their monthly mortgage repayments consistent it is possible that consumers will be able to plan their finances much more effectively. This may cause them to meet other sources of financial demand, such as loans, plastic cards and household bills with greater comfort.

Despite the popularity of fixed-rates among a significant number of Britons, the majority of homeowners are unsure what mortgage option they should opt for as more than half (58 per cent) state that they are still uncertain. Meanwhile, four per cent of respondents are looking to get a standard variable product, the same number with their eyes on a tracker deal. Three per cent of those questioned want a two-year tracker offer.

Nici Audhlam-Gardiner, head of Abbey Mortgages, said: “The research suggests that continued talk of economic gloom has had two effects on borrowers - they are either determined to take the more stable option or are confused about the best mortgage option to take. There is continued interest in longer terms fixed-rate mortgages, reflecting customers’ confusion in what will happen in the markets short-term and also some fatigue with the two-year remortgage effort and costs. Borrowers need to be sure however that the deal they take out is right for them and that they understand the different types of mortgages available before signing up to anything.”

The financial services firm also pointed out that many homeowners are looking towards a fixed-rate deal to protect their monthly mortgage repayments, despite expectations that the base rate of interest is due to fall over the course of this year. Not only did the Bank of England’s monetary policy committee elect to cut rates this month but it also chose to reduce them in December.

And should loan lenders choose to pass on the decreases to their customers, it is possible that those mortgage-holders on a variable or tracker-rate deal could see their monthly payments fall. This may cause them to meet other sources of financial demand, like credit cards and loans, with greater ease.

Another way in which monetary pressures could be reduced is through a UK consolidation loan. This type of loan could allow consumers to meet a number of pressures on their spending at once, consolidating them into a single low-rate repayment. Earlier this year, Sean Gardner, chief executive of MoneyExpert, claimed homeowners concerned about missing a mortgage repayment should be proactive in getting to grips with money management. Research from the firm revealed that 463,000 Britons missed a payment on this area in the six months ending December 2007.

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