Fixed Rate Mortgages - House Price Latest - UK Housing Market News

The finding s from mortgage broker John Charcol show that fixed rate mortgages declined considerably in November 2009, with only just over a fifth of clients - 21.3% - choosing a fixed rate, five percent lower than the October findings.

Most clients who opted for a fixed rate mortgage took a 2 year fix, with nearly all the rest choosing a 5 year deal.  This is the smallest market share for fixed rates since October 2008 and continues the dramatic decline from their recent peak market share of 83.1% only 5 months ago in June.

The cost of both fixed and variable rates fell in November as a result of some increased competition from lenders.

“Although fixed rates fell a little further than trackers  the difference in the initial pay rates still assumes Bank Rate will increase more quickly than many economists predict and on most interest rate forecasts a good tracker will cost less than a comparable fixed rate over at least the next 2-3 years,” said Ray Boulger of John Charcol.

Roger Bootle, Managing Director of Capital Economics, forecast that Bank Rate would not exceed 1% in the next 5 years.

"In this uncertain world things can change quickly and so we have advised many of our clients to take a lifetime tracker rate with low and only short term early repayment charges so that they are in a position to switch quickly to a fixed rate if the interest rate outlook changes,” continues Boulger.

“Although we don’t expect longer term (say 5 years or more) fixed rates to fall much below the current best rates of just under 5%, it seems probable that rates around this level will be available for some time. Thus borrowers on a variable rate will probably be able to benefit from a tracker rate more than 2% below a comparable 5 year fix for quite a while before considering switching to a fixed rate.”

Data released by Nationwide found that house prices rose by 0.5% in November, 2009, the same rate as October. Year-on-year house price inflation increased from 2.0% to 2.7%. The latest research from the National Association of Estate Agents (NAEA) found that the number of first-time buyers entering the property market is now at its lowest level since December, 2008.

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