Fixed-rate mortgages ‘loosing their appeal’

Fixed-rate mortgage deals are losing their appeal with British homeowners, according to the latest data from the Council of Mortgage Lenders (CML).

The CML reports that October saw the fifth successive monthly fall in demand for fixed-rate mortgage deals, which the council believes reflects the widespread belief that the cost of borrowing is set to fall to 5.25 per cent later this month.

However, any reduction in borrowing costs will not ease the debt management problems faced by many thousands of families that are struggling to pay off their mortgages under the terms of an ongoing fixed-rate deal.

According to the CML’s figures, the average first-time buyer in the UK took on a mortgage loan worth 3.3 times more than their annual incomes and the council has suggested that the trend away from fixed-rate deals will continue.

Paul Holmes, chief executive of Firstrung, claimed recently that first-time buyers in the UK are often taking on “absurd” levels of mortgage-related debts to get a foot on the housing ladder.

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