Mortgages 'confusing for new borrowers'

Date:Friday 26th June 2009
Author: Susanna Kavka

New borrowers are facing confusion concerning which mortgages to choose, it has been claimed.

According to Mortgageforce, people are increasingly being torn between selecting fixed-rate and variable-rate home loans as fixed products increase in price.

It suggested that the fixed-rate mortgages rose in price by an average of 0.6 per cent this week, whereas variable loans dropped in some cases by up to 0.3 per cent.

The firm said that whereas 75 per cent of its borrowers had been opting for fixed-rate products, this has fallen 64 per cent this week.

Technical manager for Mortgageforce Katie Tucker said: "The lenders have to keep their split between customers on fixed rates and tracker rates even, to mitigate the risk of their own wholesale costs rising; so they price their fixed and tracker deals to attract attention accordingly."

Recently, Legal & General suggested that 87 per cent of borrowers have chosen fixed-rate home loans so far during the second quarter of this year.