View more on these topics

Borrowers opt for long term fixed rates

Mortgages Direct says a record numbers of borrowers are opting for long-term fixed rate deals as homebuyers fear that rates will not only rise imminently but increase even further over the next five years.

Mortgages Directs monthly survey reveals that number of five year fixed rate loans, comprising of 26% of all mortgages arranged in May, have increased to their highest levels.

This is despite a general hardening in the swap rate market and a widespread increase, albeit of only a modest 0.10% to 0.15% so far, in interest rate levels for fixed rate deals in anticipation of a base rate rise later this year.

Although the Bank of England has kept interest rates at 4.5% for 10 months now, fixed rate mortgages have been going up in price as many lenders have factored in an increase in their fixed rates in anticipation of a base rate rise later this year.

In contrast tracker mortgages, whose rates have stayed static, are more competitive than fixed rate deals.

Despite this, Mortgages Directs survey reveals that the number of borrowers opting for tracker mortgages has decreased from 14% in April to 8% in May.

Peter Gladdy, director of Mortgages Direct, says: With the increasing speculation that interest rates will rise in the imminent future, more borrowers are becoming a lot more cautious.

They are not prepared to take the chance that the rates will only increase by the already widely speculated amount of a quarter per cent.

They fear further hikes in the forthcoming years. An increasing number of borrowers are weighing up the benefits of cheaper rates against long term security and are currently opting to pay above the odds for long term security.

With interest rates in historical terms at inherently modest levels, borrowers are showing little confidence that the rates will remain at this level.

Despite the competitive tracker deals currently on offer, borrowers are worried that repayments with a tracker could rise beyond their budget.

Recommended

Brown celebrates Islamic contribution to economy

Gordon Brown has celebrated the invaluable contribution of the Muslim community and put forward an ambition to make Britain the global gateway to Islamic finance and trade. Speaking at the Islamic Finance and Track Conference in London, the chancellor of the exchequer thanked the Muslim community for their enormous contribution to the British economy. He […]

World Cup offer on MT products

The Mortgage Times Group has launched a range of exclusive products in conjunction with Platform which offer free valuations for the duration of the World Cup. All prime products are exempt from the offer. Sub-prime three-year products are 0.1% lower than the standard range including buy-to-let and Right to Buy deals. The near prime bonus […]

Wider distribution for Unity deals

Three more firms will now distribute Unity Homeloans mortgages. Primrose Mortgage Processing, Countrywide Mortgage Centres and NicheMortgage Solutions have recently become members of the PMPA which is the sole distributor of Unity products.

Pitt says resignation was amicable

Brian Pitt has put the record straight about his resignation as director of sales and operations of Beacon Homeloans and revealed that he has been released from his non-compete contract following an amicable split. Pitt was rumoured to have quarrelled with long-time partner and fellow director Mark Abbott and resigned in protest, despite the dynamic […]

Navigating volatility

The making of any fund can be seen in how it responds to crises and opportunities. In this short video, Head of Multi Asset at Royal London Asset Management Trevor Greetham outlines how the Royal London Global Multi Asset Portfolios or GMAPs navigated through Brexit and the US election cycle. He also highlights the importance […]

Newsletter

News and expert analysis straight to your inbox

Sign up