Fixed rate deals and secured loans - 20/7/07

On the back of five 0.25% interest rate rises since August 2006 fixed rate mortgages are proving incredibly popular.
The Council of Mortgage Lenders (CML) reported that 89% of first-time buyers and 73% of home movers took out a fixed rate deal in May, representing a 1% rise in both sectors from April.
In addition house prices are still rising despite the interest rate rises.

The high level of fixed rate mortgages in the UK is leading to increasing rises in the numbers of people taking out secured loans or second mortgages as it is proving cheaper to add a second mortgage when raising funds for debt consolidation; home improvements; new cars; holidays and second properties, rather than pay the high penalty fees associated with settling a fixed rate mortgage within the fixed rate period.

Many fixed rate schemes still charge the maximum settlement penalties even if a customer is nearing the end of a fixed rate period.

People who remortgaged on long term fix rates prior to or during the recent Bank of England interest rate rises are very keen to keep their existing first mortgage interest rates in place.

‘Secured homeowner loans offer an excellent way to raise funds quickly by releasing equity in your property whilst leaving your existing first mortgage intact. There are over 250 secured loan products available in the market with many plans to suit people with very good credit ratings as well as those with a poor credit history’.

- John Spratling,