Five-year fixed-rate mortgages 'a better option than two-year'

Date:Wednesday 26th May 2010
Author: Susanna Kavka

A mortgage expert has suggested that people deciding to lock themselves into a fixed-rate product should opt for a five-year deal.

Ray Boulger, senior technical manager at John Charcol, claimed that individuals are actually reducing their risk by fixing their interest rate for five years.

In contrast, interest rates may have gone up by the end of a two-year fixed-rate mortgage, so homeowners will need to pay more.

He remarked: "The problem with a two-year fix is that if interest rates stay low – which I think they will – then a two-year fix is going to be less good value than a tracker."

In his view, the best options available to people currently are five-year fixed-rate arrangements and tracker deals.

This month, the Council of Mortgage Lenders revealed there was a 25 per cent increase in new mortgage approvals in March compared to the previous month and a 45 per cent year-on-year rise, with this figure reaching 45,000.