Five-year fix popularity at all-time high: Paragon

The proportion of homeowners opting for five-year fixes is at an all-time high, according to new research by Paragon Mortgages.

Its latest Financial Advisers Confidence Tracking Index report found that 39 per cent of all mortgages were now five-year fixed-rate deals, the highest proportion it has recorded.

Fears about future interest rate rises are driving this trend. In total, almost 90 per cent of all mortgages arranged in the last quarter were fixed rate deals. This is up from 87 per cent in the same quarter last year.

Two-year fixes remained the most product popular, accounting for 47 per cent of all mortgages.

According to Paragon the popularity of fixed-rate mortgages has been rising steadily since 2011, but in the third quarter of this year there has been an increase in sales of five-year fixes and an easing of demand for short-term mortgage deals.

Paragon Mortgages managing director John Heron says: “With interest rates gradually increasing after a long period of historic lows, it is not surprising that homeowners are racing to fix the cost of their mortgage for the longer term. Over the coming months, it is likely that we will see a further surge of borrowers locking into fixed rates before they climb higher.”

This FACT Index – based on interviews with 199 mortgage intermediaries – shows that while much of the demand for lending comes from those remortgaging, this declined between Q2 and Q3 of this year, from 39 to 36 per cent of the mortgage market.

Meanwhile, first-time buyer and buy-to-let mortgages now take a higher percentage of the market. BTL mortgages now make up 17 per cent of all mortgage cases.

Heron adds: “It is positive for the buy-to-let market to see application numbers increase after weaker numbers in the previous three quarters. Hopefully this will be a sign of things to come for the BTL market after a period of uncertainty following regulatory changes, reduced tax relief and the uncertainty around Brexit.”

Recommended

John Heron

Mortgage broker confidence at two-year high: Paragon

Mortgage intermediary confidence is at its highest level since 2015 since 2015, according to the latest Financial Advisers Confidence Tracking Index report from Paragon. The report is based on interviews with 199 mortgage intermediaries and found the index to be 105.9, the highest score since Q4 2015. The report found the increase is in part […]

John Heron

Paragon scraps application and valuation fees on BTL portfolio products

Paragon has scrapped valuation and application fees on all buy-to-let portfolio products. The specialist lender has removed the usual £150 application fee and the valuation fee for a limited time only. The deal follows the launch of four new 2-year fixed portfolio products in October. Paragon Mortgages managing director John Heron (pictured) says: “It’s important […]

UK-Currency-Money-Coins-700.jpg

Experian eyes 25% stake in L&C

Experian is set to buy a 25 per cent stake in L&C Mortgages. L&C chairman Mike Edge will remain the majority shareholder. Edge says: “The market is changing at pace and we are determined to lead the way through this exciting partnership with Experian to accelerate the growth and development of our hybrid digital proposition. […]

Health Shield logo - thumbnail

Health Shield launches new and improved health and wellbeing benefits

As part of its commitment to help even more companies improve employee wellness and productivity, award-winning health cash plan and wellbeing provider Health Shield has announced a raft of new and improved health benefits. From early diagnostics, detection and screening services to rehabilitation and the extension of home care support to parents, Health Shield’s range […]

Newsletter

News and expert analysis straight to your inbox

Sign up