Borrowers Searching For Long Term Deals

Consumers looking to secure mortgage deals are showing a preference for long-term deals, according to online mortgage advisory service mform.

Research from the group has found that more than 45 per cent of all searches made by visitors to the site were for mortgages with loan terms of five years or more. The company stated that before the credit crunch, this type of arrangement was much less popular. 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 He explained that the market had seen some turbulence, with products withdrawn at short notice and headline rates fluctuating considerably.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 people looking to get on the property ladder, a loan may prove useful to help fund a quick deposit. However, consumers may be advised to opt for this type of loansooner rather than later after MoneyFacts explained that the secured loans market is shrinking rapidly as credit conditions worsen.

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

Abbi Rouse writes for All About Loans where visitors can apply online for cheap tenant loans. We also specialise in UK homeowner loans, and self cert loans for the self employed. Visit today www.allaboutloans.co.uk/

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