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Homeowners `losing touch with mortgage reality`

By Nicholas Boyle - Financial specialist

10 January2011

According to tracking data from unbiased.co.uk, today`s generation of mortgage holders is `rate-spoilt`.

Homeowners are, on average, prepared to fix their mortgage at an unrealistic 3.3% - much lower than the average of 4.0% recorded in January 2009.

As reported in a press release from the website, it appears the `lengthy period of low interest rates has resulted in homeowners losing touch with mortgage reality` - with best buys for three-year fixed-rate mortgages currently standing at around 5.1%, almost 2% higher than the average homeowner is willing to fix at.

At the end of 2007, the interest rates on fixed-rate mortgages reached 7.8% - which means the current average of 5.1% seems to be a `good deal` amid speculation that interest rates will rise.

Although data since 2005 shows that fixed-rate deals have never fallen below 2%, 16% of homeowners would only be happy fixing at this level or less for the next three years - highlighting, as the release states, `the stark contrast between homeowner ideals and reality`.

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Tags: homeowners, mortgage, reality, mortgage reality, fixed rate, variable rate

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