Borrowers take long-term view

Over a quarter of mortgage holders say they would opt for a fixed rate of more than five years if they were taking out a loan tomorrow, a survey by the Council of Mortgage Lenders reveals.

The CML&#39s annual survey of consumers also shows that just over one in five respondents would prefer an interest rate fixed for five years or less while just over one in 10 would choose a variable rate. Nearly a quarter of those who would pick a fixed rate of more than five years thought it would be the cheapest option.

The survey also reveals that the rate of interest is the main factor initially influencing peoples&#39 choice of mortgage, with three in 10 citing this factor. Not many less said the main influence on their choice of mortgage was advice offered by a professional. Just over one in 10 cited the willingness of the lender to lend the amount required as influencing their choice.

Despite the upward trend in interest rates, almost three-quarters of borrowers currently have a repayment mortgage compared with just over half last year. Half of all borrowers hold a variable rate while over a third have a fixed deal with 5% of these holding a fixed deal of more than five years.

On average, homeowners have held their loans for five years with a quarter saying they have held their mortgage for less than a year compared with a fifth last year.

Sue Anderson, spokeswoman for the CML, says: “What consumers say they will do and what they actually do don&#39t always match up. But this survey suggests that borrowers have an appetite to manage their risk and generally have a responsible attitude to their finances.”