Borrowers continue to opt for fixed rates

Mortgages Direct, the financial subsidiary of Spicerhaart, has revealed that more borrowers are continuing to opt for fixed rate deals because they arent convinced low level of interest rates will hold.

Research from Mortgages Direct shows 96% of borrowers opt for fixed rate deals of two to five years.

Peter Gladdy, director of Mortgages Direct, says: “With many fixed rate deals being withdrawn from the market and being replaced by higher rate deals, albeit still at competitive rates, borrowers are eager to snap up the remaining affordable deals. Rates for fixed deals have generally increased by 0.2% to 0.3% – however there are still some very competitive offers with five year fixed rate deals under 5% and two year fixed rate deals under 3% still available.

“An increasing number of borrowers are now becoming a lot more cautious and are not prepared to take the chance that the base rate will remain at the current level and are therefore fixing their loans. Choosing a good fixed rate is always a better alternative as borrowers can make substantial savings.”

As well as exercising caution by opting for fixed rate deals borrowers are showing a more responsible attitude to debt with the number of borrowers opting for repayment deals over interest only deals increasing to 71% from 65% last month.