Homeowners miss lowest fixed-rate mortgages in decades

A huge 46% of homeowners have not reviewed their mortgage at all since March 2009 when the base rate first hit 0.5% and 16% believe the base rate is so low they do not need to worry about reviewing. With fixed rates falling below 5% for the first time in decades and the threat of future interest rate rises becoming more real, homeowners are potentially missing out on the best fixed-rate deals.

When it comes to fixing however, the rate homeowners would be prepared to fix at now is an unrealistic 3.4%.  This has dropped from an average 4.0% in January 2009.  Interestingly the last 24 years has never seen five-year fixed rates lower than 4.99% and the current average three-year fixed rate is 4.35%.  Despite the current market conditions and fixed rates reaching an all-time low, homeowners remain out of touch with what is available to them.

However, fixed-rate mortgages do remain popular with 18-34 year olds, where 44% currently have one, a rise of 6% from 38% in January 2011. This suggests the security of a fixed rate is attractive to the ‘first time buyer’ market.

Karen Barrett, Chief Executive of unbiased.co.uk, said: "With the base rate now remaining at a record low of 0.5% for 31 months, our tracked research shows that homeowners could be missing out on the opportunity to bag some record fixed-rate deals. Once rates begin to rise so will the price of fixed rates, meaning that now could well be the perfect time review their mortgage finances and move to guard against the potential of increased payments in the future.  The low base rate has also had a dramatic effect on homeowners’ rate expectations with our research showing a stark contrast between what consumers would be willing to fix their mortgage to and the average rate available."

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