Q2 2009 Key Findings:
87% of residential borrowers chose a fixed rate compared to 71% in Q1
Average two year fixed rate increased to 5.46% from 4.78% in Q1; however, average three, five and ten year fixed rates all dropped
Average residential LTV was 60%, whereas for buy-to-let it was 70%
Stephen Smith, Director of Housing at Legal & General said: "Borrowers who are prepared to take out variable rates have been few and far between in the past three months. And who could blame them? Margins on these products are high and it's almost a cast iron certainty that when the base rate next moves, it will be upwards. Fixed rates had been offering the full package until recently, in that they had been getting cheaper and they offer valuable peace of mind in a turbulent and uncertain environment. Some of the fixed rates on offer have been very good value, however many are now very much on the rise.
"Average three, five and ten year fixed rates all dropped in the period from March to May, but a hardening of swap rates in the past few weeks will no doubt feed through to higher fixed rates in our next report in Q3. Average loan-to-values have not varied too much over the past year and a half, with residential LTVs hovering around the 60% level. It feels like we are entering a new phase of the credit crunch now though - talk of a recovery has been gathering pace and fixed rate pricing may well have bottomed out. There has been no significant upturn in house sales or mortgage lending, but both consumer and adviser confidence is up. Let's hope this translates into real results."
