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Legal & General's latest mortgage index shows that consumers are still choosing fixed-rate mortgages despite the cost of doing so rising.
Its research shows that three-quarters of mortgages were fixed rates in the second quarter of 2008, up from 57% in Q1.
The average two-year fixed rate now stands at 6.51%, up from 5.87% last quarter, with three-year fixes up from 5.84% to 6.99%. The average five-year fixed-rate mortgage now stands at 6.34%, up from 5.82%.
The actual amount people are borrowing has fallen to from 66% loan to value (percentage of a property price) to 63%.
Stephen Smith, Legal & General’s, director of housing, said: “The price of fixed rates and petrol keeps going up and up, yet consumer appetite for both shows no sign of abating.
“There has been a huge jump in the number of homeowners opting for fixed-rate mortgages despite the significant increase in rates, particularly for two- and three-year deals. It shows how risk averse the UK mortgage population is if we still prefer to choose certainty over value.”
The truth about house prices
We are constantly bombarded with, often conflicting, information regarding house prices. Paula John provides a round-up of the major indices, explaining why they differ.
The September/October issue of Your Mortgage is on sale now. In it we look at how far you can – and should - go when arranging a mortgage online; the help available for first-time buyers from lenders, family and the government; we explain the advantages of using a good adviser and how to find one, and why buying a brand new property can be kind to your wallet and your nerves. Get your copy for the latest news, information and help.
The Your Mortgage Awards aim to reward those lenders that have excelled in providing innovative and competitive products. Widely regarded as the UK's definitive consumer mortgage awards, the Your Mortgage Awards have now been running for 20 years.





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