28 Aug

Consumers 'switching to fixed-rate mortgages'

Consumers 'switching to fixed-rate mortgages'

The uncertainty over the future direction of interest rates has prompted more people to take out fixed-rate loans, Nationwide has said.

As the lender announced its latest house price figures it revealed that fixed-rate deals are now more popular than trackers, although the latter deals have been cheaper on average since October 2007.

Nationwide chief economist Fionnuala Earley said: "This change in behaviour could be an indication that borrowers are keen to be sure of their outgoings in uncertain times and wish to protect themselves."

Ms Earley also noted that borrowers are keener on taking out long-term fixed-rate mortgages, with research by Nationwide showing that 43 per cent more have said they are more likely to choose such a deal now than12 months ago.

The uncertainty felt by consumers may arise from the fact that the Bank of England's monetary policy committee has been divided over the question of interest rate policy as it deals with the conflicting threats of rising inflation and falling growth.

In each of the last two meetings the majority has voted to hold the rate, but Tim Besley has supported an increase while David Blanchflower has voted for a cut.

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