The August index showed that despite variable rate savings surpassing fixed rate savings for two and three-year products, over 80 per cent of new borrowers are still sticking to fixed rate offers.
Peter Gladdy, director at Mortgages Direct, whose borrower research for August revealed similar results (89 per cent of borrowers opting for fixed rate deals) was not surprised by this: “Many mortgage brokers are advising borrowers to take out fixed rate products now before the best deals are pulled as the path that interest rates will take in the future is uncertain.”
Jon Round, remortgage analyst at Your Move, agreed that despite variable products currently offering the best savings, this may not remain the case for long. “While discounted variable rate mortgages have cheapened, fixed rates have remained, so far, stable.
“Borrowers are still preferring fixed rate deals, not least because these fixed rates are likely to rise over the next few weeks due to increasing concerns about inflation which is threatening to scupper further Base Rate reductions.”
“This means it may still be wise to choose fixed rates despite the immediate savings on discounted variable rates being higher,” he said.
Your Move’s August index also revealed that upfront fees have risen by over 25 per cent over the last month for two and three-year fixed rate products as lenders attempt to offset their low rates.
Results from Mortgage Direct’s borrower survey showed optimism with regards to the first-time buyer market and highlighted a regional difference in five-year plus fixed rate mortgages.
Results revealed that 35 per cent of buyers in the North sought long-term guarantees for their property, as opposed to 15 per cent in the South.
