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Re- Mortgages Stabilization

Currently many of the home owners in the UK are beginning to seek re-mortgages over purchasing new property. Most of the homeowners cannot afford to upgrade to a larger property; therefore they seek a re- mortgage now that their two year fixed deal is coming to a close. Rather than destabilizing their lives they are looking for stabilization through re- mortgages.

Abbey Researched the current market to obtain knowledge on the mortgage front. What Abbey found was one in three mortgage borrowers would opt for a five year fixed rate mortgage if they were contemplating re- mortgaging today. This means that 5.1 million people, with a further 1.1 million would obtain a mortgage for ten years and 1.5 million people would want a 15 year mortgage deal in order to supply stability to their lives through their mortgage options.

The Bank of England’s base rate is 5.75 percent, and it seems they are working to cut the rate again. However it doesn’t seem to matter that the Bank of England is looking to cut rates again. Instead many of the homeowners would rather stay with the current mortgage they have and just re- mortgage once the five year or two year fixed portion of the mortgage is up. Homeowners are looking to stabilize their lives, rather than play the interest rate game.

According to 65 percent of 8.8 million people, Abbey found the borrowers like to know what the mortgage will cost them on a month to month basis rather than being concerned about the variable interest rate mortgages being offered at the moment. Another 700,000 borrowers were concerned about the tracker mortgages being offered as they know little about them.

Nici Audhlam- Gardiner from the Bank of England mentioned that one never knows what will happen in the future, but when borrowers feel they have a long term commitment and they understand the repayments they are more satisfied than not knowing.

The borrowers feel they need a deal that will look out for them rather than the bank. This means they will seek to re- mortgage to a fixed deal for the next ten to fifteen years over trying to purchase a different property. They also need to understand the mortgages available to them before signing the deal for a re- mortgage. Understanding the deals can help them find that stability.

Lloyds TSB also did a study during this current year. They found 60 percent of homeowners believed the interest rates would fall in the future, but again they would not risk a tracker mortgage because of the lack of understanding. For homeowners it is essential that they understand the deals they are going to choose. This means for those who do not understand the current tracker mortgage deals, they will not consider the deal. A homeowner is looking for stability over the best interest rate at the moment. For deals that offer tracker mortgages at 5.75 percent the homeowner is not going to go for it. They would rather a deal that they understand and know where the repayments are coming from.

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