Three-year fixed rate mortgages becoming a popular option for buyers

April 12, 2016 by Brendan O'Neill

Borrowers

The number of three-year fixed rate mortgage deals on offer has soared, according to Moneyfacts.co.uk.

Buyers generally end up choosing a deal with a term of somewhere between two and five years. Although these deals can provide financial certainty for the short term, they lock buyers into a specific rate for a longer length of time.

Fixed rate deals lasting for three-years could be considered a compromise, and it appears that more of them are being introduced by lenders. According to Moneyfacts.co.uk, the three-year deal offers a mix of security and a lower interest rate for customers. The site stated that there are currently 524 deals available, in comparison with two years ago when there were 442.

In April 2014, the average rate for a three-year fixed rate deal was 3.97%, but is now 2.9%. A finance expert at the company, Charlotte Nelson, said:

“Increased competition in the mortgage market means that lenders are branching out in order to attract the attention of borrowers. This has resulted in a recent boom in three-year fixed rate mortgages, as well as a marked drop in the average three-year rate to the lowest on record.”

Nelson added that although buyers often want to take advantage of the low interest rates, many are cautious of tying themselves into a long term deal. Three-year deals offer a compromise for many buyers.

CeMAP qualified mortgage advisers have the knowledge required to help buyers make the most suitable decision for their situation.