Fixed rate borrowing dips - Mortgages - News - Moneyfacts

News

Fixed rate borrowing dips

Fixed rate borrowing dips

Category: Mortgages

Updated: 15/01/2010
First Published: 15/01/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The popularity of fixed rate mortgages dipped in the final quarter of 2009 as the threat of an increase in base rates eased, new research has revealed.

According to Paragon Mortgages, the proportion of fixed rate cases introduced by mortgage brokers fell from 62% in the third quarter to 46% in the final quarter of the year.

This was the second consecutive quarterly fall in fixed rate business, after two quarterly increases in the first half of the year.

By contrast, base rate tracker mortgages increased from 33% to 45% of all cases handled by brokers during the period.

Discount rate mortgages accounted for 6% of all cases, whilst capped rate and cashback only cases accounted for less than 3% of business between them.

"We saw the proportion of fixed rate cases rise substantially in both the first and second quarters of the year, which is understandable as the Bank of England base rate had tumbled and borrowers wanted to lock themselves into attractive deals before the rate started to rise again," said John Heron, managing director of the mortgage provider.

"However, the rates attached to fixed rate deals are currently less attractive and borrowers increasingly opted for tracker deals during the latter half of the year, particularly in the final quarter."

In terms of repayment type, interest only mortgages accounted for just 18% of cases during the fourth quarter, the lowest proportion of total business since the third quarter of 2004.

Repayment mortgages increased from 69% of mortgages in the third quarter of the year to 70% in the fourth quarter, the sixth quarter of the past seven to witness a rise.

"The use of capital and interest, in preference to interest only, is being driven by a more conservative and prudent approach, as well as better affordability due to low interest rates," Heron added.

Compare five year fixed rate mortgages

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Remortgaging bounces back

Remortgaging has been enjoying a welcome boost in recent months, despite September’s slight dip, with many homeowners capitalising on record low mortgage rates to boost their finances.

Bank of Mum and Dad holds the (house) key

The Bank of Mum and Dad is an important source of finance for many young adults, and it seems that they still hold the key – in more ways than one.

Fee-free mortgages on the rise

Mortgage rates may be at record lows, but for some people, the extra costs associated can make switching deals a financial impossibility. It’ll come as welcome news, then, that the number of fee-free deals has more than doubled over the past year!
 
Close