What has prompted borrowers to lean towards fixeds?
Following the Bank of England’s recent base rate reduction, mortgage rates have hit their lowest levels in nearly two years, spurring renewed interest in property ownership. To gauge how these changes are influencing consumer preferences, the mortgage team at Compare the Market surveyed 4,950 UK consumers to identify the most popular mortgage types in 2024.
Top mortgage choices
The survey found that the fixed-rate mortgage is the most favoured option among UK consumers, with 28% indicating that they would consider this type of mortgage. This popularity, according to the report, stems from the financial stability offered by a guaranteed rate. However, 9% of respondents were hesitant due to the potential lack of benefits from future rate decreases. Another 8% cited the long-term commitment as a deterrent.
Repayment mortgages followed, with 20% of consumers considering this option. However, concerns about future interest rate hikes and lender-controlled rates discouraged 9% of respondents from choosing this mortgage.
The third most popular option is the 10-year fixed mortgage, with 15% of participants willing to lock in a rate for a decade. Yet, the extended commitment period and the potential to miss out on lower rates during the term were concerns for 13% and 11% of respondents, respectively.
Mortgage preferences and reluctances
While fixed-rate and repayment mortgages dominate, the survey highlighted other notable trends. Joint mortgages are considered by 13% of respondents. However, the complications of co-ownership if relationships change deterred 16% from this option.
Tracker mortgages attracted 11% of respondents. The variable nature of these rates can offer savings when base rates are low, but 13% expressed concerns about unpredictable payments and rising interest rates.
Bad credit and guarantor mortgages were the least popular, with only 5% of Brits open to considering these options. Despite 20% of respondents acknowledging poor credit scores, many were deterred by higher monthly payments and interest rates associated with these mortgages.
The survey underscores the diversity of consumer preferences in 2024, with fixed-rate mortgages leading the pack. However, the findings also reveal significant reluctance among some to engage with the mortgage market at all—28% of respondents stated they would never take out a mortgage, highlighting ongoing financial concerns and a cautious approach to long-term commitments in a fluctuating economic climate.
What are your thoughts about these latest findings? Let us know in the comments below.
