Five-year fixed rate mortgages are rising in popularity, with 49 per cent of mortgage customers now opting for this term, according to data collected by Paragon.
The data shows that this figure has almost doubled since 2013, when 25 per cent of mortgage customers chose five-year fixed rate products.
Subsequently two- and three-year fixed rate mortgages have dropped in popularity, with the former declining from 54 per cent of mortgage customers opting for this term in 2013, to 37 per cent as of Q1 2019, and the latter dropped from 18 per cent to 12 per cent in the same time frame.
According to Paragon, 90 per cent of mortgage intermediaries cited low interest rates and concern over future rate increases as the top factors behind the rise in popularity of the five-year fix.
The lender adds that intermediaries do not predict any disruption to the rise in popularity of five-year fixed terms.
A more stable economic climate post-Brexit was stated by intermediaries as the most likely factor to lead to an interest rate rise and therefore reduce attractiveness, according to Paragon.
Paragon managing director of mortgages John Heron comments: “The five-year fix has found a real sweet spot in the market.
“Low interest rates, economic uncertainty around Brexit, a drop in home-mover transactions and more remortgaging means that five-year products have become a viable option for a much larger proportion of customers.”