Many seeking a first time home buyer mortgage are choosing to go with a fixed rate, in order to get peace of mind. The problems in the current market have taught many first time home buyer mortgage seekers that variable rates can be dangerous. Although there are few first time home buyer mortgages to go around, the ones that are getting approved seem to be fixed.
“There is clearly a lot to be said for peace of mind when it comes to financial products, after all, the King of mortgage protection - the fixed rate - is as popular as ever. Yet it is because of the relatively high prices of fixed rates at the moment that this product may well find some homes up and down the country. The product would be best compared to a capped rate mortgage, but unfortunately we find ourselves with no capped rates currently available. The decision therefore rests on what your view on the future of interest rates is,” says Drew Wotherspoon of Charcol.co.uk.
“If you believe rates are going to rocket up in the foreseeable future then there will clearly be some merit in taking this product or a fixed rate, but they really would have to go up by well over 1% in 2 years for there to be value. I do not believe that this is the future direction for rates, quite the opposite in fact.”
Related reading: First Time Buyer Mortgage
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