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First-time Buyers

Record number of borrowers taking fixed rates

Adam Williams
Written By:
Adam Williams
Posted:
Updated:
25/03/2014

More home buyers than ever before are choosing to fix their mortgage rates according to data from Mortgage Advice Bureau (MAB).

Its research found more than 19 in every 20 buyers apply for fixed rate mortgages as borrowers look to protect themselves against future rate increases.

This beats the previous high recorded in December 2013 and January 2014.

This move towards fixed rates was despite rises in the average rates on two, three- and five-year fixes. Products in each three categories rose by between 6 and 8 basis points month-on-month.

By comparison the average tracker rates fell by 6 basis points between January and February to 2.82% – the lowest recorded in over six-and-a-half years since MAB’s survey began in June 2007.

Brian Murphy, head of lending at Mortgage Advice Bureau, said: “Buyers are very much aware that this golden age of low priced mortgages will not last indefinitely. The surge of activity should help to keep rates competitive, but consumers may struggle to find many better deals in the months ahead than those already out there.

“Five-year rates have been creeping up since last summer, so the chance to lock into a low interest rate is well worth considering. With property gaining in value, it’s no wonder so many buyers are keen to buy now if their finances allow it.

“All the same, there have been reassuring signs from the Bank of England that a rate rise is still some way off. When it finally happens, the Bank’s careful supervision of the economy means the base rate is only likely to rise gradually and should remain well below the 5% we were used to before the crisis.

“There is certainly no cause to panic if you need longer to plan your move or save for a deposit. Lenders will want to put your finances through some rigorous ‘stress tests’ to check you can cope with higher rates, so ask your broker to advise what level of repayments you can reasonably afford.”


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