Stock market turmoil makes fixed rates more attractive
Stock markets across Europe have endured a roller coaster ride in reaction to a lack of confidence in politicians to sort out the debt problems. On Friday, the main indices fell sharply, prompting concerns that a second credit crunch may be possible, although the FTSE recovered significantly yesterday.
Meanwhile, interest rates were held at 0.5 per cent for August – the 29th month in a row. This was entirely expected by the markets, which are not factoring in a rate rise until next year at the earliest.
This stock market uncertainty should make fixed-rate mortgages increasingly popular. As gilt yields fall, reflecting the UK’s safe haven status, low Swap rates are resulting in lenders cutting their fixed rates, with several five-year deals now priced at under 4 per cent – their lowest ever level.
Private Finance has access to five-year fixed rates from 3.64 per cent (5.1 per cent APR), available to those with a 25 per cent deposit. Those who don’t need this level of certainty may be able to secure a two-year tracker from 1.98 per cent (4.5% APR).
It is important that borrowers are not complacent about interest rates. It is worth seeking advice from Private Finance if you are coming to the end of a fixed or discounted mortgage deal, or seeking a new home loan.