Following last month’s base rate cut fixed rate mortgage deals have hardly changed. However according to Mortgages Direct, the financial subsidiary of Spicerhaart, over four in five mortgage buyers (89 per cent) have been choosing fixed rate deals over variable rate alternatives. Over 50 per cent of these are choosing two year fixed rate deals, which typically start at 4.35 per cent over the fixed term. There is however a regional differential looming in respect of longer term fixed rates (5 years or over) whereby 35 per cent of mortgage buyers in the north looked sought longer term guarantees as opposed to 15 per cent in the south.
Despite discounted variable rate deals improving following the base rate cut, only one in 100 mortgage buyers are choosing them. Base rate tracker mortgages are attracting 10 per cent of buyers.
First time buyers continue to make a cautious comeback, accounting for 44 per cent of mortgages sought at Mortgages Direct, up from 42 per cent in July and 35 per cent in May. This tentatively suggests that confidence is returning within this important buying group.
Peter Gladdy, director of Mortgages Direct, commented: “Whereas some people had predicted a second rate cut, expectations are now that they have stabilised for the time being. Many mortgage brokers are therefore advising borrowers to take out fixed rate mortgages now before the best deals are pulled, as the path that interest rates will take in the future is uncertain.
“The number of buy-to-let mortgages taken out still remains comparatively low, but has increased slightly. With rental yields on the increase, buy to let may be slowly but surely making a comeback, and, once the currently cautious investor fully understands the concept of SIPPS, we expect the number of buy to let mortgages taken out to continue to increase in the future.
“It also remains the case that most borrowers continue to choose repayment mortgages over interest only (78 per cent vs. 19 per cent), which confirms that borrowers prefer a programme to repay their debts and bring their borrowing under control.”
