Fixed-rates 'best for larger purchases'

Britons buying expensive properties have largely found themselves insulated from recent turmoil in the credit markets, it has been advised.

Independent financial advisory firm Bestinvest has said that despite the price of such properties, many were being bought by first or second-time buyers, and consequently fixed-rate mortgages were more popular because of the security that they provided.

Recent figures from the Council of Mortgage Lenders show that almost nine per cent first time buyers purchased a property worth between a quarter and half a million pounds in July – up from seven per cent in January.

"Most people at this sort of level will tend to go for a fixed rate – because an increase of even a quarter of a per cent can add £60 or £70 to their mortgage [repayments]," commented Bestinvest mortgage manager Peter O'Donovan.

"They tend to be new purchasers, first or second time buyers, so they're a bit cautious with the mortgage.

"Most people lock themselves in for a couple of years on a fixed rate. So in two or three years time when they come out, we would suggest that the rates would be lower so they won't be affected too much [by the current problems]," Mr O'Donovan concluded.

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