Mortgages are being kept at a cheap level due to increasing confidence that interest rates will remain low for a reasonable length of time.
This is according to Ben Wilkie, editor at What Mortgage, who noted there are currently a number of affordable two-year fixed-rate home loans on the market because there is an assumption that even if these rates were to rise, such an escalation will not be on a major scale over the next 24 months.
The industry expert observed it is easier to predict what will happen over a two-year period rather than to foresee events over half a decade – which is why five-year agreements remain slightly more expensive.
Speaking of the charges involved in such deals, Mr Wilkie added: “The fee is bigger with a shorter deal period than it is for a longer period because it would be spread over a much shorter period of time.”
His comments follow the launch of Leeds Building Society’s lowest-ever two-year fixed-rate mortgage rate of 1.99 per cent.
