Consumers still opting for fixed rates

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.”