Fixed rate purchases rose sharply at start of 2011
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Purchases of fixed rate mortgages increased sharply at the beginning of 2011, according to John Charcol’s latest mortgage index.
The broker firm says the index confirms the recent trend for the rising popularity of fixed rates, which it states has been a major factor in the ongoing boost to remortgage activity.
Ray Boulger, senior technical manager at John Charcol, says: “March 2010 marked the lowest proportion of our clients buying a fixed rate, just 17%, since when there has been a slow but steady increase, with a rapid acceleration in the first two months of this year to February’s 55.4%, following heightened speculation about base rate increases.
“Over 2010 as a whole only 25.6% of John Charcol clients chose a fixed rate, well under half the proportion in 2009. We expect this percentage to peak at around the current level in the mid 50s because after the recent sharp rise in the cost of five-year fixed rates their attraction has diminished.”
Boulger says if the economy remains weak, there will be better opportunities to fix later this year or in 2012 and borrowers who have missed the boat ought to consider waiting for fixed rates to fall before switching.
The index also shows purchase business increased from 48% in 2009 to 54.2% in 2010, while remortgaging activity improved in the second half of 2010 as borrowers’ began to anticipate a rise in the base rate.
Boulger says: “People are not likely to remortgage if they anticipate moving within a few months and so the low level of activity in the housing market is another factor likely to continue influencing the remortgage market, although we estimate that for at least a third of all borrowers a remortgage is out of the question, either because of insufficient equity in their property or because they can no longer meet lenders’ much tougher criteria.”
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