Homeowners 'unsure' of best mortgage deal

Almost four times as many home owners would choose a fixed rate mortgage if they had to renew their mortgage tomorrow, with 10.3 million people saying they would fix and just 2.8 million saying they would choose a tracker mortgage this month, it has been revealed.

The news could come as a surprise to many as a falling base rate this year would mean that remortgaging to a tracker mortgage rate could mean a lower rate for home owners in the future, suggesting that some borrowers may not fully be aware of the best options available to them.

A total of 31 per cent of home owners said they would choose from a two, three, five, ten or 15-year fixed rate. An astounding 58 per cent of home owners however said they would not be sure what rate to choose or what plan to take should they be forced to remortgage immediately. Most surprising however is the four per cent of home owners, or 1.3 million people, who said they would stick with their lender's standard variable rate if asked to remortgage their homes tomorrow.

The research, conducted by Abbey Mortgages' monthly Remortgage Tracker, found that ten year fixes were just as popular as five year fixes when people were asked what plan they would choose if remortgaging their home tomorrow. The research found that 2.4 million people, or seven per cent of home owners, would decide to go with a ten year fixed rate mortgage, while 1.8 million people or six per cent of borrowers, would choose to refinance for a fifteen year mortgage tomorrow. Two-year fixed rate mortgages remain the most popular however with 2.7 million people or eight per cent of the population, saying they would choose this option.

Demand for longer-term fixed rate mortgages continues to increase however as both ten- and 15-year fixed rate mortgages are almost as popular as two-year fixed rates at just one and two per cent respectively behind the most popular two-year fixed rate deal.

According to Abbey Mortgages, concern over the economy could have had a serious impact on borrowers' choices as they opted for the safer options or were not sure what path to take.

The continued interest in longer-term fixed rate mortgages has reflected confusion on the customers' side as to how the economy will fare in the short term but borrowers need to be sure that the mortgage option they decide to take out is the best deal for them and reflects their own stability.

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