Homeowners are taking more caution with their mortgages, following the monetary policy committee's (MPC) recent spate of interest rate hikes.
A study by website fool.co.uk found that around 90 per cent of first-time buyers are choosing fixed-rate mortgages, while eight out of ten of those remortgaging are choosing not to take out variable rate mortgages.
This is up from four out of ten homeowners who chose fixed-rate mortgages in August 2006. Two interest rate increases later and the number of borrowers taking out fixed-rate products has jumped to 80 per cent.
"Fixed-rate mortgages are the best way for homeowners to insulate themselves from rate rises. It's ideal for people who need to know where they stand financially from pay packet to pay packet," commented David Kuo, head of personal finance at fool.co.uk.
He added: "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 for £996 a year in higher interest payments on a £200,000 loan."
The next MPC interest rate decision will be made on April 5th.
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