It claimed consumers are wary that the low level of interest rates will not hold, with 93 per cent of borrowers opting for fixed rate deals of 2 to 5 years. Variable and tracker mortgages have decreased to only 7% of the share of types of mortgages in July.
Peter Gladdy, Director of Mortgages Direct comments: “Although the interest rates have dropped consumers are clearly showing little confidence that they will remain low. An increasing number of borrowers are now becoming a lot more cautious and are not prepared to take the chance that the rates will remain low and are therefore securing their loans at the current levels.
“We support the Bank of England’s decision to decrease the interest rates, however the economy is still fragile and we urge the Bank of England to continue to make positive steps and reduce the rates still further to help the flagging economy recover.”
Mortgages Direct has also seen a significant increase in first time buyer mortgage applications over the past three months. The percentage of first time buyers has increased from 35% in April to 42% in July 2005.
Peter Gladdy comments; “Although we have seen an increase in first time buyer levels, the housing market is still faltering and it is vital we continue to help first time buyers onto the property ladder. At Mortgages Direct and Spicerhaart we have been concentrating our efforts on encouraging first time buyers to the market with various innovative initiatives, which have been hugely successful. However interest rates are a major influence on buyer and seller activity and the decrease in interest rates will certainly help encourage more first time buyers to the market.”
