Rising interest rates have prompted UK homeowners to think about moving their mortgage to the safety of a fixed rate deal, a survey by ICM for Direct Line Financial Services has revealed.
The Direct Line survey, which is the first in a series, compares the different views of UK homeowners against personal finance journalists on mortgage interest rates.
Interestingly, homeowners appear more pessimistic than journalists about an increase in base rates, but journalists are more likely to take action if rates do rise.
The key findings of the survey revealed that:
64% of UK homeowners think rates will go up at next MPC, compared to only 48% of personal finance journalists.
By the end of the year, UK homeowners expect base rates to hit 5% or more, while most personal finance journalist expect them to reach between 4.50% and 4.75%.
Both UK homeowners and personal finance journalists would worry even if their monthly mortgage payments increased by £25.
If interest rates do go up, 40% of UK homeowners and 50% of personal finance journalists say that they will move their mortgage, preferably to the safety of a fixed rate mortgage.
Fixed and capped rate mortgages are more popular amongst journalists than the population as a whole.
Jeremy Peat, group chief economist at RBS Group, says: “Under RBS' central forecast, while interest rates are likely to stay constant this month, there is likely to be a further 0.25% increase in base rate in May to 4.25%, with rates increasing further during the year and reaching 4.75% by the end of 2004.”
“Another indication that consumers are now taking a longer term view is the demand for our five-year fixed mortgage is outstripping demand for our two and three-year deals.
“And while fixed rates have historically been more popular with first-time buyers, Direct Line is now seeing a shift in customers across the board remortgaging to a fixed rate, rather than avariable rate mortgage.”