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Longer-term mortgage products overtake two-year deals

Two-year deals for mortgage products have been overtaken by longer-term deals for the first time, according to research conducted by Paragon.

The Financial Adviser Confidence Tracking (FACT) Index report – based on interviews with 198 mortgage intermediaries – revealed that 48% of applications have been reported at five years or more in Q4 2017.

With a 7% increase on Q3 2017 and 15% on the same period 12 months earlier, the preference for longer-term fixed products is becoming increasingly popular.


In contrast, two-year terms (which has been the main choice over the last five years) made up 40% of fixed and tracker cases in Q4 2017, down 7% on the previous quarter and 14% on its peak achieved in Q3 2013 and Q3 2014.

This comes at a time when general preference for fixed rate mortgage products hit another record high, the second in successive quarters and third in 12 months, up to 91% of all cases. The preference for tracker products, however, reached an all-time low in Q4 2017, down from 9% to 7% in Q3.

Remortgaging continues to drive the buy-to-let market, with the proportion of buy-to-let remortgages back up to 52% in the last quarter of 2017.

Despite a marginal decline in Q4 2017, a better interest rate remains the main reason for obtaining a buy-to-let remortgage – making up 55% of all cases. Some 35% of landlords (the lowest recorded) used a buy-to-let remortgage to raise capital in the same period.

“The results of our latest intermediary research highlight the overwhelming preference that the market has for fixed rate products and increasingly for longer term fixed rate products,” John Heron, managing director of mortgages at Paragon, said.

“Much of this is driven by the understandable requirement that landlords have for payment stability into the future against an uncertain economic backdrop.”


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