First-time Buyers

Fixed rates dominate mortgage market

Adam Williams
Written By:
Adam Williams

More than four-in-five new mortgages are taken out on a fixed rate basis, market research has shown.

Statistics from mortgage lenders Paragon found that 81% of all customers who used a mortgage broker took out a fixed rate product.

The number of borrowers applying for a tracker product fell 3% in the second quarter of the year, cancelling out the increase that occurred in the first three months of the year.

Two-year fixes remained the most popular length, with 52% of new customers taking out this kind of mortgage. However, longer terms are increasing in popularity. Almost a third (32%) of new loans were fixed for five-years or longer, 9% higher than in the previous survey.

This caused the popularity of one-, two- and three-year fixes to fall by 4%, in comparison to the first quarter of 2015.

John Heron, director of mortgages at Paragon, said with uncertainty over interest rate rises many borrowers were looking to lock in for longer.

“The second quarter findings highlight the popularity of fixed rate products across the wider mortgage market. Tracker rate products continue to appeal to some but it is no surprise to see a strong preference for fixed rates given the latest guidance from the Bank of England,” he said.

“The research continues to point to an increase in the popularity of longer-term fixed rates, it may well be that the attractive rates that have been offered will not be available for much longer.”