Cheap fixed rate mortgages have been few and far between since the summer of 2006, when interest rates began to rise. Five 0.25% interest rate increases between August 2006 and July 2007 made finding an affordable fixed rate mortgage impossible for many consumers.
The financial outlook however, is looking pretty good for the coming months. Analysts predict that along with the single âbase cutâ that has already been made this year, a further two will be made during the summer and then possibly another before the end of the year.
This is reflected in the fact that a number of popular lenders are now offering two year fixed rate mortgageâs with an APR of 5%.
On a larger scale, the popularity of fixed rate mortgages has soared over the years, with them offering stable monthly repayments, regardless of whether interest rates go up or down.
They have been particularly popular amongst first time buyers, who need the assurance that their monthly outgoings are going to remain stable.
Essentially, taking out a fixed rate mortgage is a gamble. Those tied into a fixed rate mortgage over the past year or so will have reaped the benefits as interest rates have risen, but their repayments remained the same.
If interest rates fall though, you will still be paying the same amount. Also, its worth noting that once your âfixedâ term is up, usually after 2 â 5 years, you will be charged the mortgages typical APR, which depending on the current market state could be considerably higher.
Taking out a mortgages is a huge, long term financial commitment. For these reasons, it is essentially that proper research and comparison is conducted before you tie yourself into a lengthy mortgages contract.This article is free for republishing Source: http://www.articlealley.com/article_481700_19.html
