Demand for longer fixed-rate deals is rising, particularly among those remortgaging, according to sales figures from Accord.
Among this group, Accord said it had seen a 30 per cent increase in the number of applications for five-year fixes over the last year.
This indicates that buyers are increasingly prioritising long-term security against future interest rate rises, over securing the lowest possible rate today.
The biggest increase came in November last year, where demand jumped by 10 per cent in the space of a month. This followed the Bank of England’s decision to raise interest rates by 0.25 per cent at the start of the month.
This trend continued into December with two in five remortgage customers applying for a five-year deal.
Purchasers also appear to be concerned about the cost of rate rises over the longer term. Among homebuyers Accord said there had been a 11 per cent uplift in applications for five-year fixes over 2017.
Accord’s national intermediary sales manager David Robinson says: “Due to the competitiveness of five-year deals at the moment, borrowers feel they will save money in the long run by plumping for a longer-term fix.
“The changing economic, social and political landscape over the past year may have made borrowers nervous.”
He said at the same time many five-year fixes had become more competitive, narrowing the gap between shorter and longer-term fixed rate deals. He claimed there was only a 0.15 percentage point difference between the ‘average’ two-year fix (at both 60 and 65 per cent LTV) and the five-year rates offered by Accord at these LTVs.