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Fixed products still most popular with advisers, Paragon finds

Fixed term mortgage products remain the most recommended by mortgage advisers, according to Paragon’s latest Financial Advisors Confidence Tracking (FACT) index.

The index, based on interviews with around 200 mortgage intermediaries, found an increased preference for five-year fixes, which accounted for 32 per cent of product applications submitted by intermediaries in Q3 2016, up from 29 per cent in the previous quarter.

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The growth in popularity of five year products is part of a long-term trend, says the report, with five year fixes accounting for 29 per cent of business in the same quarter two years ago, and 24 per cent in Q3 2013.

Whilst numbers remain low, fixed rates of longer than five years are also growing in popularity and accounted for 2 per cent of business in the latest quarter, up from 1 per cent in Q1 2016.

While fixed rates overall remain the most popular choice for borrowers, making up 81 per cent of applications introduced in Q3 2016, there has been a small increase in preference for variable rate products (from 2 per cent in Q2 2016, to 3% currently) and for tracker products, up from 13 per cent to 15 per cent in the latest data.

Paragon Mortgages managing director John Heron says: “The economic outlook remains uncertain and volatile. With some very low longer term fixed rates available in recent weeks it is no surprise that intermediaries are recommending these products to landlords who need a stable payment profile to help them manage the increase in tax that many will see as the changes introduced in the summer budget of 2015 start to bite.”

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