First-time buyers are increasingly opting for fixed-rate mortgage deals, according to data released today by an industry body.
In May this year, nearly 90 per cent of those buying a home for the first time went for a fixed-rate mortgage product, the Council of Mortgage Lenders (CML) has revealed.
This is one per cent more than went for a fixed-rate product in April and may have been prompted in part by the interest rate rise at the start of the month.
The Bank of England’s monetary policy committee voted to increase the base rate to 5.5 per cent in early May, the fourth increase in less than 12 months.
However, the CML has advised first-time buyers opting for fixed-rate products to be aware of potential consequences when the mortgage reverts to a tracker system after the initial fixed period expires.
“Taking out short-term fixed-rate mortgages may provide some reassurance but eventually the loans will revert to a variable rate and the risk of a payment shock is real,” he said.
Householders on tracker mortgages saw their repayments increase by an average of £16 a month when the base rate went up again in July.
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