A third of Brits go for five-year fixed rates
A third of all mortgage borrowers who took out a deal in the third quarter of this year opted for a five-year fixed rate mortgage, according to a study from lender Paragon Mortgages. This figure is up from just 10% in 2013.
The report revealed an ongoing shift in preferences towards longer-term fixed rates, with five-year deals experiencing their second quarter of successive growth.
Of all mortgage products selected in the third quarter of 2015, the overwhelming popularity of fixed rate mortgages remains unchanged – they account for a massive 83% of all mortgages taken out. In fact, despite the growth in five-year fixed rates, two-year fixes still made up almost half of all mortgage cases (48%).
Tracker deals accounted for just 14% of deals taken out during the last quarter, as borrowers chose to lock into a fix to protect against possible rises in interest rates.
The Financial Advisers Confidence Tracking (FACT) Index from Paragon also revealed that confidence levels amongst financial advisers are at their highest since 2008. This is being driven by a strong recovery in the first-time buyer market, with volumes of first-time buyer lending having recovered to levels last seen in 2001.
John Heron, managing director of Paragon Mortgages, says: “Mortgage intermediaries are telling us that they are more confident now than they have been at any time since the financial crisis. It is clear that a strong recovery across all lending is driving this, with a particular improvement in first-time buyer numbers and buy-to-let.”