The fixed rate mortgage loan prevails in various degrees of perfection in different parts of the world. In the United States it has all along been very popular whereas in neighboring Canada it is found to prevail in a semi fixed mode with the fixed component confined to a limited period. In India too, the fixed rate home loan is very popular and mortgage loans are available for very long durations of up to 30 years as in the United States.
One of the most attractive features of the fixed rate mortgage loan is the relative safety it offers the borrower since his loan repayment would remain the same throughout the duration of the mortgage. Unlike the adjustable rate mortgage loan where the repayment is prone to disruptions of interest rates going up or down in equal measure the fixed rate mortgage borrower is relatively free from any change in his repayment of the mortgage.
Most mortgage companies have positioned this safe and steady aspect of the fixed rate mortgage in a way that caught the borrower’s imagination with its ‘peace of mind’ angle. However opinion has been more or less mixed about whether the fixed rate mortgage is more popular than the adjustable rate mortgage as the profitability or the lack of it varies with different situations. Like most other mortgages the fixed rate mortgage also offers early redemption within stipulations and subject to penalties if applicable.
- In the United States the prevalent fixed rate mortgage rates range between 5.4 % and 6 %
- In India the prevalent home loan rates range between 7.5 % and 8 %
- In the UK when interest rates rise, even the fixed rate mortgages get affected. Mortgage durations in the UK range from 6 months to full lifetime.
Lloyds Group
HSBC
Merrill Lynch
Prudential
Pulte Homes
Fixed rate mortgages have undergone a lot of changes in different situations and had evolved over the years. Nowadays global companies that are constantly improving their services with a customer oriented approach optimize their offer to suit localized situations. As a result a large number of products could be found with flexible features that address the particular needs of the borrower while assuring sufficient profitability to the lender.
