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Three-year fixes back in favour

Home owners are three times more likely to opt for a three-year fixed rate mortgage, compared with six months ago, shows research by Abbey for Intermediaries.

Abbey conducted research into the preferred mortgage products of 692 borrowers in July. It found that 21% of those polled would opt for a three-year fixed rate deal, compared to 9% who would choose a two-year deal and 8% who would fix for five years.

Overall, approximately 52% of home owners would now choose a fixed rate product, up from 35% six months ago.

Demand for tracker mortgages has remained steady throughout this year, with 11% of home owners saying they would opt for a tracker rate if remortgaging tomorrow. This is compared to 10% in July and 12% six months ago.

The research also found that 36% of borrowers said they were unsure about which type of mortgage they would choose, which is a fall from 41% last month.

Ricky Okey, managing director of Abbey for Intermediaries, says: “With the number of first-time buyers in decline, intermediaries are looking to retain their client base by focussing on those customers who will shortly be looking to remortgage.

“With the FSA predicting as many as 1.4 million home owners coming to the end of their fixed rate period this year, you can expect to see somewhere in the region of 120,000 people looking to remortgage this month alone.”

He adds: “Three-year fixed deals are proving very popular as homeowners opt for the middle ground between the short two-year fixes and a five-year deal.”

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