Surge in applications for fixed rate deals

With many industry experts predicting that the Bank of England will hike up interest rates again in May, consumers in the UK have been flocking to avoid the financial implications of yet another rise by applying for fixed rate mortgages.

The interest rate in the UK was hiked up last August, then again in November, and a third time in January of this year, taking the interest rate from 4.5% to 5.25% in the space of just six months. And another interest rate hike in May could mean that the interest rate rises to 5.5% or beyond.

According to one online mortgage company the number of applications that have been made for fixed rate deals has risen by thirty percent in the space of just one month. Consumers are rushing to try and get the best fixed rate deals as a result of the predicted hike in a bid to try and avoid the financial pinch that they will face with a variable rate mortgage in the event that the interest rate does rise again.

However, for many the bid the get a fixed rate mortgage is a futile one, as many lenders are now taking some of their best fixed rate mortgage deals off the market as a result of the prediction.

A number of mortgage lenders have already increased interest rates on various mortgage products in addition to taking some of the lowest rate fixed rate mortgages off the market, making it more difficult for consumers to lock their interest rate before another rise is applied by the Bank of England.

Consumers are also being urged to take care when looking for a fixed rate mortgage and not to rush into a decision without taking all factors into account. For instance, some fixed rate mortgages can seem like a very good deal, but the lenders may apply high arrangement fees, which can really bump up the cost.

Tom Smith
04.05.07

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