Fewer borrowers choose fixed rate deals
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Fewer fixed rate deals were taken up between October and December last year compared to the previous three months, research from Paragon Mortgages reveals.
The Financial Adviser Confidence Tracking index, which polled 200 advisers, shows that the proportion of fixed rate deals introduced by brokers fell from 62% in Q3 last year to 46% in Q4.
Meanwhile trackers linked to the Bank of England base rate went up in popularity, going from a proportion of 33%in Q3 to 45% in Q4.
Interest-only mortgages dropped to 18% of cases introduced by brokers, the lowest level since Q3 2004, while repayment deals rose slightly from 69% of total business to 70%.
John Heron, managing director at Paragon Mortgages, says: “The use of capital and interest, in preference to interest-only, is being driven by a more conservative and prudent approach across the whole industry – as well as better affordability due to low interest rates.”
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Readers' comments (2)
Anonymous | 14 Jan 2010 2:17 pm
I cannot believe that the increase in tracker mortgages is being driven by customers.
If you take the common sense approach any tracker mortgage which tracks the BOE rate plus 2 0r 3 0r 4% is likely to disapoint.
The BOE interest rate can only go up, in one direction which means they will all track upwards, if the banks maintain their margin this will end in a bad move for most in the medium term.
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Matthew | 15 Jan 2010 3:37 pm
I totally agree.
I feel we advisers are being slightly vilified for recommending fixed rates at the moment due to cheaper trackers and a still stagnant BOE base rate.
However it must and will rise and any clients tied in to a tracker will find their outgoings increasing.
I still believe fixed rates are most suitable to many clients who need stability and to know a max outgoing over a period of time.
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