Borrowers confused over mortgages

Published: February 20, 2008

New research suggests that many British mortgage borrowers are confused about which type of deal to take out.

Abbey has revealed that confusion among analysts about which way the base rate of interest is likely to go has led to uncertainty among borrowers.

People are more likely to take out a fixed-rate deal if they believe that rates will fall, while falling rates encourage borrowers to opt for tracker-rate deals.

Nici Audhlam-Gardiner from Abbey said that many people are simply too confused to make a decision.

"Depending on who you talk to there are different outlooks for the UK economy and for Bank of England base rates. While most economists agree they will go down, there is debate about how much they will fall and when," she said.

"This uncertainty leaves homeowners with a bit of a dilemma on their hands – what is the best mortgage to go for?

"Our research shows that most popular still is the two-year fixed rate deal, but this is followed closely by five year fixes," added Ms Audhlam-Gardiner.

The base rate of interest currently stands at 5.25 per cent.