Level of fixed rate mortgages at all-time high as trackers fall: Paragon

The level of fixed rate broker introduced mortgages on the market reached an all-time high in Q1 2017, according to a report from Paragon Mortgages.

The Financial Advisors Confidence Tracking Index report, based on interviews with 200 mortgage brokers, found that between January and March, 89 per cent of mortgages introduced were fixed rate, up 6 per cent on the previous quarter and the highest figure in the survey’s 20-year history.

Business-Growth-Drawing-Chart-Performance-700x450.jpg

The report says that this follows on from an upward trend that has risen sharply since the end of 2010, when fixed rate and tracker mortgages comprised 46 per cent and 45 per cent of all cases respectively.

In the same seven-year period, tracker mortgages were found to have have declined, accounting for just 10 per cent of mortgage business in Q1 2017, the lowest ever level.

Two year fixed rates were still the most popular product, despite declining to 48 per cent in Q1 2017 from 53 per cent three months earlier. The most notable shift in Q1 was found to be the increase in five year fixes, up 3 per cent to 34 per cent of all mortgages in the quarter.

Buy-to-let lending was said to have stabilised in the first quarter of 2017, accounting for 18 per cent of all mortgages handled, whilst remortgaging remained the most common type of borrowing.

Paragon Mortgages managing director John Heron says: “It’s clear to see that the benefit of certainty at such low rates is continuing to drive up the popularity of fixed rate mortgages – particularly five year fixed terms, which gained further ground in Q1 2017.

“The widening in favour of remortgages over purchase transactions [in buy-to-let] suggests that supply to the PRS may be coming under pressure which in turn may lead to higher rents.”