Many borrowers like the comfort of a fixed rate deal and figures for the UK mortgage marketplace showed that last year over half of all deals arranged were for fixed rate products. Now product choice is usually skewed by provider strategy with loan companies manipulating their offers to encourage borrowers to choose the deals that suit them best. By offering some great fixed rate products, borrowers were faced with some fairly simple choices.
Interest rates at the time had been suffering a series of step increases and the attraction of a fixed rate deal made perfect sense to people. Knowing exactly what you are going to repay and that it is not going to increase is a comfortable feeling, especially when borrowers on variable rate arrangements are seeing their costs increase month on month.
But there's always a consideration to make with fixed rate deals - that being stable costs despite a series of interest rate reductions and that's what we have seen over the past 5 months. Also lenders are not certain about the medium-term future of money markets and due that lack of clarity are unable to offer such attractive fixed rates.
