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Tuesday 24th July 2007
Over the last two years, fixed-rate mortgages have been the most popular choice for homeowners, but some mortgage lenders are predicting a drop in their popularity.
Figures from the Council of Mortgage Lenders (CML) show that since the beginning of the year, more than three quarters of all mortgages have been fixed-rate deals, but with interest rates now at a six year high, many people are hoping they will come down again and are therefore avoiding fixed-rate deals.
Mortgage lender GMAC-RFC is predicting increased demand for discounted and tracker mortgage deals.
Julie Gaskin, corporate relations manager at GMAC-RFC, said: "In a rate rising environment it often makes sense for borrowers to take out a fixed-rate deal, especially if a future rate rise would mean their monthly mortgage repayments will increase, and this has certainly been the mantra of many a mortgage expert over the last few years.
"However, the tide is now turning, and fixed-rates currently on offer are higher than we have seen for several years, making tracker and discounted deals look increasingly attractive, and in many cases cheaper.
"Now is the time for intermediaries to harness the change and look towards tracker and discounted products to drive business growth as demand for this type of product will inevitably increase in the foreseeable future.
"Those that shy away from this may be missing a trick with consumers hungry for a good deal."
The void between fixed and discounted or tracker mortgages has recently got much wider.
Very few fixed-rate deals under six per cent are now available, with some creeping up to seven per cent.
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