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Fixed rates find favour

Fixed rates find favour

Category: Mortgages

Updated: 24/06/2009
First Published: 23/06/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Borrowers have increasingly opted to fix their mortgage rate over the last three months, providing further evidence of a shifting trend in the housing market..

In the second quarter of 2009, 87 per cent of residential borrowers opted for a fixed rate compared with 71 per cent in the first quarter, according to the latest Mortgage Purchase Index report from Legal & General.

However, in that time average two year fixed rates increased to 5.46 per cent from 4.78 per cent, while three, five and ten year rates all dropped.

"Borrowers who are prepared to take out variable rates have been few and far between," said Stephen Smith, director of housing at Legal & General.

"And who could blame them? Margins on these products are high and it's almost a cast iron certainty that when the base rate next moves, it will be upwards."

Research from revealed that the average 2 year fixed rate mortgage deal jumped by 0.16 per cent last week, the biggest increase for 12 months. Five year fixed rates rose even further, jumping by 0.21 per cent in five days last week.

Ray Boulger of mortgage broker, John Charcol, also recently warned that consumers looking to secure a fixed rate deal should do so imminently. "The message for borrowers wanting to take a fixed rate is clear," he said, "get in now or miss out on the current relatively low rates.

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