How a fixed rate mortgage can bring you peace of mind

Fixed rate mortgages for peace of mind

In the past, clients were not keen on fixed rate mortgage options for their mortgage lending as it was almost always the most expensive option. With higher interest rates than flexible mortgages, many people overlooked the security that fixed mortgage rates could bring.

Contact A Mortgage NowWith the advent of the financial crisis in the eurozone, mortgage rates are being affected world wide and this includes in the UK. Although Britain opted, quite sensibly to stay away from indulging in the single currency, the funding sources for the housing market are in turmoil all the same.

Rising mortgage rates

Mortgage rates have already started to rise in the UK as a direct result of the financial uncertainty that is dominating the Euro Zone, and the changes are most significant for first time borrowers. The reality is that with the mortgage lenders so risk adverse, and mortgage rates on the increase, it is becoming extremely difficult to step onto even the first rung of the housing market in Britain today.

The rise in the rates of interest on mortgages is directly linked to the rise in the Euribor, and more precisely when talking about the selected UK high street banks and lenders, the Libor. This figure is the inter bank offered rate at which banks are willing to lend to each other, and the amount has been inching steadily higher amid fears around the Euro crisis.

Bank lending

Banks have lost the confidence to lend to each other, and it is the customer of the libor linked tracker rate mortgage who is directly affected by decisions made by the money lenders. Monthly repayments on libor tracker mortgages rise each time the Libor rises, but does not effect those who have secured a fixed rate mortgage.

How will you cope with a higher mortgage rate?

Even a small rise in underlying market rates could push your monthly mortgage repayment to a level that you can no longer afford; as a result, fixed rate mortgages are being favoured, especially by new buyers and those remortgaging. Although the fixed rate on new your mortgage may well appear to be high when you first apply, you can sleep well at night with the knowledge that any changes in the lending markets will not affect your mortgage repayments.

Fixed rate for safety

In times of such crisis and financial uncertainty that not just Britain or Europe, but the whole world is finding itself in, a fixed rate mortgage is by the safest way of investing in property. Although this type of lending facility lacks the flexibility of mortgage holidays and early pay back that you can enjoy with other schemes, in times of such turmoil, the fixed rate method is becoming more and more popular.

If you do indeed opt, or have opted already for a libor tracker rate facility, you will see just how the Libor will be affecting the amount that you pay each month. Through times of low interest rates, the customer may have found a tracker mortgage product very advantageous, but these advantageous times are now being quickly replaced by turmoil and uncertainty.

With the Libor free to rise more, the crisis in the Euro zone will have an even more disastrous affect on the average persons’ mortgage plan, and with recession not just affecting the Euro Zone, but Britain too, many home owners who find themselves in a precarious financial situation. Even those not under threat of immediate job losses, are living every day with the possibility of losing their home if underlying mortgage rates rise too much, too quickly.

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