Fixed rate mortgages reach milestone

Category: Mortgages
Date: 2/23/2010

More than two thirds of new mortgage lending in 2009 was on a fixed rate basis, according to research unveiled as part of the celebrations surrounding the fixed rate deal 'coming of age.'

Just over 21 years after the first fixed rate mortgage was introduced to borrowers, 68% of mortgage deals arranged last year were fixed, according to Council of Mortgage Lenders' figures.

First coming to light in the late eighties, research by Moneyfacts.co.uk reveals just 12 fixed rate products were on offer from 12 lenders in February 1989; now, more than 1,300 deals are available through 69 lenders.

The wider economy has altered significantly in that time too: in 1989, the Bank of England base rate stood at 13%, compared with the historic low of 0.50% today.

In the early days, two year fixed rate mortgages were the standard option available to borrowers, with three or five year deals occasionally on offer.

However, products offering a term of anything between one and 25 years have been available since, although the longest term currently available is 10 years.

The rates on offer have also changed dramatically in that time. The average fixed rate deal attracted a rate of 12.55% back in February 1989, compared with 5.38% today.

"In today's market, borrowers can select their product based on a number of factors - including the term, type and rate," said Stephen Noakes, mortgages commercial director at Halifax.

"It's easy for us to take that level of choice for granted, but before the introduction of fixed rates, borrowers simply didn't have access to the same options.

"Ever since their introduction 21 years ago, fixed rate mortgages have been fundamental for homeowners looking for certainty and stability in managing their household expenses, and this is an important milestone to mark."

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