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Borrowers flock to fix it

Borrowers flock to fix it

Category: Mortgages

Updated: 11/06/2009
First Published: 11/06/2009

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 It is now over 6 months old so the content may be out of date.

Latest figures from the Council of Mortgage Lenders (CML) have revealed consumers are opting for fixed rate mortgages in numbers not seen for 10 months.

The body says the take up of fixed rate products increased further in April as the interest rate cycle has now reached its floor.

In the month, 69 per cent of borrowers took out a fixed rate mortgage – the highest proportion since June 2008 – with an average rate of 4.83 per cent.

"With the interest rate cycle now at its floor, an increasing proportion of borrowers are taking out fixed rates, including for longer term periods of five to ten years," said CML head of research, Bob Pannell.

"With expectations for rates to remain low in the near future, shorter term fixed rate deals are less appealing than attractively priced variable rate deals."

The figures come just a day after a leading expert urged consumers to move quickly to secure the best fixed rate mortgages currently on the market.

A sense of urgency has developed because of soaring swap rates, which reflect the City's long tem rate expectations. Fixed rate mortgages are primarily based on this measure, rather than the Bank of England's base rate of interest.

Ray Boulger, of broker John Charcol, warned: "With most borrowers currently choosing a fixed rate mortgage, if the interest rates continue to rise then the current recovery in the housing market, which is based primarily on much improved affordability as a result of a combination of lower house prices and lower interest rates, may well wobble.

"The message for borrowers wanting to take a fixed rate is clear; get in now or miss out on the current relatively low rates."

Today's Product Focus on will outline some of the best fixed rate mortgages currently on the market.

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