Fixed-rate mortgages ‘offer piece of mind to stretched homebuyers’

Homebuyers who are financially stretching themselves to get onto the property ladder should opt for a fixed-rate mortgage, an industry expert has said. Louise Cuming, head of mortgages at moneysupermarket.com, explained that fixed-rate mortgages are attractive to homebuyers already worried about their ability to meet monthly repayments as they insulate them from future rises in interest rates.

She added that, while fixed-rate mortgages might not provide the best available deal in an environment where interest rates are expected to drop, they do offer first-time buyers piece of mind . There’s absolutely no doubt that people in the first few years of their home buying lives have to stretch to the absolute maximum of their income, Ms Cuming explained. So, what they’ll do is take a fixed-rate mortgage for peace of mind.

They won’t particularly be thinking: ‘Let’s gamble on a tracker because rates might go down’. They think: ‘I can only afford 1,000 a month, if rates go up, I will be stuck’. So that’s the main factor that drives people to fixed rates. Most importantly, Ms Cuming said that it was vital people made a decision about the best mortgage based on personal circumstances .

Abbey Mortgages recently suggested that many young first-time buyers needed money from their parents in order to get on the property ladder.