x
By using this website, you agree to our use of cookies to enhance your experience.

TODAY'S OTHER NEWS

Popularity of fixed-rate mortgages soars

Paragon Mortgages’ latest Financial Advisors Confidence Tracking (FACT) Index report has revealed that the preference for fixed-rate mortgages reached an all-time high in the first quarter of 2017.

The report, based on interviews with 200 mortgage intermediaries, found that 89% of the mortgages introduced between January and March 2017 were fixed-rate, up by 6% on the previous quarter and the highest number in the survey’s 20-year history. This is part of a long-term upward trend, which has increased especially sharply since the end of 2010 when fixed-rate and tracker mortgages accounted for 46% and 45% of all cases respectively.

While the number of fixed-rate mortgages has soared, in the same seven-year period tracker mortgages have fallen at almost exactly the same pace. In Q1 2017, they accounted for just 10% of mortgage business, the lowest ever level.

Advertisement

Two year fixed-rates are still the most popular type of product, despite a slight decline in Q1 2017, down to 48% from 53% in Q4 2016. Five year fixes, on the other hand, are rising in popularity, with an increase in Q1 of 3% to account for 34% of all mortgages. 

Following a period of disruption last year – not least when the extra 3% stamp duty surcharge on second homes was introduced in April – buy-to-let lending stabilised in the first quarter of 2017, making up 18% of all mortgages handled. Remortgaging, meanwhile, remained the most common type of borrowing. In buy-to-let lending terms, remortgaging accounted for 47% of all business, prolonging a strong upward trend since the third quarter of 2013. Lending to first-time landlords, by contrast, eased to 15%, maintaining a long-term decline from 27% in Q3 2013. 

“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,” John Heron, Managing Director of Paragon Mortgages, said.

“The FACT Index gives Paragon a uniquely long-term view, and the ability to measure changing characteristics of the market, particularly in buy-to-let. The widening in favour of remortgages over purchase transactions suggests that supply to the PRS may be coming under pressure which in turn may lead to higher rents.”

icon

Please login to comment

MovePal MovePal MovePal
sign up