View more on these topics

First-timers opt for fixed rates, says CML

The prospect of higher interest rates has led a record number of first-time buyers opting for a fixed rate loan, data from the Council of Mortgage Lenders reveals.

Figures show 85% of first-time buyers chose a fixed rate deal in January, which is the highest figure on record, and just over 70% of home movers also decided on a fixed rate product.

The CML says it is encouraging that increasing numbers of first-time buyers are locking into the payment certainty a fixed rate mortgage provides, as they are the group that are more financially stretched and may suffer most if interest rates go up.

Overall, fixed rate mortgages accounted for 72% of all new loans in January which is the highest proportion since January 2006 and up from 69% in December.

The pricing of fixed rate loans continued to remain attractive compared to variable rate deals.

The average interest rate of a fixed rate loan in January was 5.27%, up from 5.23% in December, compared to the average interest rate of a discounted variable rate product which reached 5.54% up from 5.36% in December.

The survey shows an 11% seasonal fall in the number of loans for house purchase and remortgaging taken out in January – 162,300 loans, down from 182,300 in December.

But, this was still 6% higher than the 153,600 loans taken out in January 2006.

Michael Coogan, director general at CML says: “Increasing numbers of people – especially first-time buyers – are opting for a fixed rate mortgage.

Each month it seems that the prospect of another interest rate rise is balanced on a knife edge.

More and more borrowers are protecting themselves against this risk and choosing the certainty of fixing their monthly mortgage payments, which allows them to plan ahead with confidence.”

Recommended

GMAC-RFC slashes rates

GMAC-RFC has slashed the rates across its fixed rate product range.It has reduced rates by 10 and 31 basis points on its mainstream and self-cert fixed rate ranges. GMAC-RFC has also reduced the buy-to-let products between 20 and 35 basis points still offering the choice of rental incomes starting from 100% of payrate with a […]

TMB offers free valuations

The Mortgage Business is offering free valuations through Pinnacle Mortgage on its whole purchase range up to £500,000. Nigel Payne, managing director of TMB, says: “Free valuations complement the value and structure of our products.”

PMS offers TMB range

Premier Mortgage Service is offering a range of exclusive products from The Mortgage Business.The offerings include two fixed-rate options from TMB’s Self 85 range, both fixed until May 31 2009, with rates of 5.49% and 5.69%. Both products also have a cash incentive of £500, plus a refund of the valuation fee, up to £490.Other […]

Newsletter

News and expert analysis straight to your inbox

Sign up