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MS Poll result: Consumers turn to longer-term fixed rates

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  • 01/09/2011
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MS Poll result: Consumers turn to longer-term fixed rates
In the latest Mortgage Solutions poll, in a three-way split, 34% of brokers said their clients were asking about longer-term fixed rates, including ten-year deals.

The remaining 51% of brokers said they continued to see demand for short-term fixes and variable rates.

Earlier in the week, Nationwide Building Society reduced the cost of its five-year fixed mortgage range by 0.1%, while today HSBC launched a five-year fixed rate deal at 3.34%.

Jonathan Cornell, communications director at First Action Finance, said: “I think there is undoubtedly more demand for five-year fixed rates than we’ve seen in a long time because they’re better value now than they were before.

“However, I think that many people are nervous about taking fixed rates for longer than five-years because of high early repayment charges. Some people are also put off for being tied in for any longer.

“If lenders had more innovative ways of structuring products without such onerous conditions attached, that might persuade more people to go for them.”

In July this year, Newcastle Building Society launched a five-year fixed rate at 4.99%, which included a no ERC option.

Cornell added: “While this deal is not the cheapest in the market, I think people who want a five-year fix, want the flexibility of being able to repay as much of their capital without being charged a penalty.”

Andy Pratt, chief operating officer at Alexander Hall, said: “I think there are people who are looking to fix for longer because of the competitive nature of the financial services market, so they want to take advantage of the great rates while they’re still available.

“In addition, I think there’s been loads of positive media coverage about longer term fixed rates and financial advisers are talking about them more often too, which is encouraging demand.”

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