Confidence In Variable Rate Mortgages On The Increase
Below is a MRR and PLR article in category Finance -> subcategory Mortgage.
Growing Confidence in Variable Rate Mortgages
Summary
A recent report indicates that consumer confidence in variable rate mortgages is on the rise in the UK.Article
Consumer confidence in variable rate mortgage products is on the upswing in the UK. This change comes after a period when many consumers preferred more stable, albeit pricier, fixed-rate mortgages. Between August 2006 and July 2007, the UK saw five interest rate hikes, prompting many homeowners to switch to fixed-rate deals to shield themselves from further increases. First-time buyers also opted for fixed rates to avoid rising repayments during their initial mortgage years.
However, since July, the Bank of England has maintained interest rates at 5.75%. The latest announcement to keep rates steady was made just last week. Experts suggest that the decision is partly due to the potential impacts of the global credit crunch on the UK's economy, prompting a cautious approach from the Bank of England. Additionally, CPI inflation is within the government's 2% target, currently at 1.8%, its lowest in a year.
Analysts and economists predict that the Bank of England will not raise interest rates again this year, resulting in renewed interest in variable rate mortgages. Many consumers are relieved that further interest rate hikes are unlikely this year. This optimism is bolstered by speculation that rates may decrease, with expectations and calls from economists for the Bank of England to implement cuts. A reduction of at least a quarter point by the end of the year is anticipated.
Interest in fixed-rate mortgages had peaked as homeowners and first-time buyers sought solutions to cope with rising repayments. Some experts now suggest that rates could drop to about 5% by the end of next year. Consequently, many consumers may reconsider locking into more expensive fixed-rate deals to avoid overpaying in the near future.
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