Recent data from the Bank of England shows that UK borrowers are increasingly opting for shorter mortgage terms, particularly two-year fixed-rate deals.
Recent data from the Bank of England shows that UK borrowers are increasingly opting for shorter mortgage terms, particularly two-year fixed-rate deals.
In the second quarter of this year, 50% of new mortgages were two-year fixes, while just 35% chose five-year terms. This shift suggests that borrowers are hoping to remortgage to a cheaper deal if the Bank Rate falls over the next two years.
This marks a significant change from 2022, when rising interest rates prompted buyers to lock in longer five-year fixed deals to keep mortgage costs manageable.
Should You Consider a Longer-Term Mortgage?
Even with hopes of falling interest rates, a longer mortgage term may still be worth considering. Analysts predict that mortgage rates are unlikely to return to the record lows of 2021. Instead, rates may settle at a higher level, potentially around 3.5%.
Additionally, fixed-rate mortgages are priced with potential Bank Rate cuts in mind, meaning some experts believe current rates may be the best available for the foreseeable future.
Making the Right Mortgage Decision
Choosing the right mortgage term can have a significant impact on your monthly repayments and long-term financial planning. It’s essential to seek professional advice to ensure you pick the mortgage deal that best suits your circumstances.
Wondering What Your Mortgage Options Are?
Your home may be repossessed if you do not keep up repayments on your mortgage. You may have to pay an early repayment charge to your existing lender if you remortgage.
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