Rate rises affecting UK homeowners
(26 March 2007)

New research has confirmed recent opinions that a series of interest rate hikes have led more UK homeowners to turn to fixed-rate mortgage offers, it has been revealed.

A Fool.co.uk study also found that borrowers expected further rises in the coming months, with first-time buyers and those choosing to remortgage their properties among the most cautious.

Currently almost eight out of ten borrowers are looking to fixed-rate products, according to Fool – double the number that were doing so in August of last year.

Three rate rises since the beginning of that month have contributed to a doubling in the popularity of fixed-rate products among remortgagers, up from 40 per cent to 80 per cent since August. Nine out of ten first-time buyers are also now rejecting the option of variable rates.

"Currently, interest rates are expected to rise 0.25 per cent within the next two months and a further 0.25 per cent six months after that. This means homeowners may need to find an extra £83 a month or £996 a year in higher interest payments on a £200,000 loan," suggested Fool.co.uk's head of personal finance David Kuo.

However, separate research by Find.co.uk revealed that the average application fee for a fixed rate mortgage has almost doubled from £334 to £611 since February 2006.