What Mortgage predicts more demand for fixed-rate deals

Date:Thursday 25th November 2010
Author: Max Freedman

More people are likely to opt for fixed-rate deals in 2011, according to a source from What Mortgage, but it is not clear whether they will be cheaper than the alternatives.

Ben Wilkie, editor of company, explained that there is currently a difference of about one or two per cent between fixed and variable arrangements.

He suggested it is a "gamble", since borrowers could end up paying more if they switch to a fixed-rate product and the base rate only goes up by one per cent over the coming 18 months.

"For most people, you would need the interest rate to rise by at least one per cent - if not more - before it is worth ... having a fixed-rate deal," said Mr Wilkie.

The What Mortgage representative pointed out that no one really knows when the base rate will go up, but he claimed it is likely that more consumers will choose fixed products in the new year.

His comments were made after first direct predicted 2011 may be the year when such home finance agreements become dominant.