11 Jun

Five-year mortgages 'offer more stability'

Five-year mortgages 'offer more stability'

Borrowers may find that in the current market, a two-year fixed-rate mortgage no longer provides them with an adequate level of security, Moneyfacts has claimed.

The financial advice website suggested that mortgage rates could increase further. It cited the fact that inflation is currently running well above the government's two per cent target and that previous cuts in the Bank of England base rate have had little impact on mortgage rates.

Also, Moneyfacts noted that the average rate for a two-year fixed-rate mortgage currently stands at 6.68 per cent, compared to 6.66 for a five-year product.

It concluded: "There is now new scope for a borrower to possibly take a more prudent approach to look past previously popular two year deals and look for longer term stability."

Some may have already heeded this call; in May, Abbey reported that the nation's appetite for five-year fixes had increased for the third month running.
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