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Borrowers Searching For Long Term Deals

According to mform (online mortgage advisory firm) more consumers looking for mortgages are leaning towards long term deals.

A study by the group has shown that over 45 per cant of mortgage searches made were for deals with five years or more. The firm explained that in the days before the credit crunch, the number of people opting for such arrangements was far lower. Instead, most consumers opted for two to three-year deals which afforded them the flexibility to take advantage of lower headline rates with different providers.

Analysis conducted by mform has shown that currently, long-term deals offer rates of just under six per cent on average, compared with 5.49 per cent for the best two-year deals and 5.79 for the most competitive three-year loan. However, many consumers were interested in securing deals for even longer than a half decade. While 13.5 per cent of searches in the past three months recorded on the site were for mortgage deals longer than five years, 11.1 in 20 people wanted to fix the rate for the duration of their mortgage.

Commenting on the figures, Francis Ghiloni, marketing and business development director at the site, said mortgage loans availability had been a serious issue for many consumers in recent months. He explained that the market had seen some turbulence, with products withdrawn at short notice and headline rates fluctuating considerably.

"Given the continuing uncertainty we can understand why it makes sense for borrowers to lock in to longer-term deals so that they can plan their future and have a degree of stability and security. They're opting to take a deal and then sit out the mortgage merry-go-round until it settles down," he said.

Meanwhile, commenting on the popularity of variable rates seen recently, he continued: "The focus for borrowers should still be on the true cost of their loan taking into account all fees as well as the monthly payments. The mortgage market will settle down eventually and interest rates may fall so there will be a cost for security."

Further research from the group showed that 39 per cent of consumers were opting for fixed-rate deals, even though two and three-year arrangements of this type were becoming increasingly uncompetitive. Meanwhile, eight per cent have been looking for standard variable rate mortgage loan arrangements in the last three months, compared to 21 per cent who were searching for discount variable rate deals. For 1 in every 20 people, capped deals were the best choice.

However, with the mortgage market shrinking, more than a quarter (26.8 per cent) searched all mortgage types to try and find a suitable arrangement.

For those who are looking to advance on the property ladder, taking out a loan may prove an effective way to raise the capital for a deposit quickly. On the other hand, it may be advisable for consumers to apply for this type of loan as soon as possible especially as the secured loans market is diminishing rapidly as the credit crunch tightens its grip.

Article Source: http://www.newagelivingarticles.com

Abbi Rouse writes for AllAboutLoans.co.uk, a loans comparison site, visit us today for information on all loan topics including secured UK loans applications and cheap loans from all leading UK providers. Our Site: www.allaboutloans.co.uk

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