Eight out of 10 borrowers choose a fixed rate
Borrowers are heading to the safety of a fixed rate in their droves, according to a survey of mortgage brokers by lender Paragon Mortgages.
Brokers noted a clear preference among borrowers for fixes, which accounted for 83% of all cases in the last quarter of 2016, and has increased year-on-year since 2010.
Tracker mortgages remain a distant second at 14% of all cases, representing little change over the course of 2016.
Initial fixed or tracker periods of two years are still the most popular products, making up 53% of all cases in quarter four of 2016 – an increase of 5% on the same quarter in 2015.
But longer-term products of more than two years are increasingly appealing to borrowers. They accounted for 46% of all cases, with five-year fixes the second most popular product at 33% of all business.
Remortgage borrowing was up 7% in 2016, said Paragon, accounting for 39% of all mortgages handled in the last three months of last year.
That figure is also 4% up on the same period in 2015, with the increase in remortgage activity echoing industry statistics published by the Council of Mortgage Lenders (CML), who last month reported year-on-year remortgaging increases of 13% in volume and 14% in value.
Next time buyers are now the second most common type of borrower having overtaken buy-to-let lending, accounting for 23% of mortgages handled.
Buy-to-let lending accounted for 19.3% of all business and first-time buyers made up 18%.
John Heron, managing director of Paragon Mortgages, said: “Our survey data shows increased levels of activity over 2016 driven particularly by borrowers remortgaging to better rates. These are as likely to be longer term fixes as they are short term deals which bodes well for customer resilience in an uncertain market.”