This was an 11 per cent increase of borrowers taking out five-year plus mortgages. Three-year fixed rate deals accounted for 14 per cent of mortgages in February.
The level of two-year fixed rate deals dropped to 46% from 69% in January with variable rates accounting for only 8% of all mortgages taken out in February.
Steve Cox, operations director of Spicerhaart Financial Services, commented: “Borrowers are wary of two-year fixed rate deals that will not safeguard them sufficiently against this anticipated long term rise in rates. Opting for five-year deals gives them long term security.”
February also saw an increase in interest only mortgages as the January rate rise took effect and borrowers faced increasing affordability constraints.
Despite the interest rate rises, the survey also reveals that the percentage of borrowers taking out buy to let mortgages has increased slightly from 8% in January to 10% in February.
Cox continued: “Many investors are looking to property for a long-term investment. Although interest rates have increased, the cost of borrowing is being met by rental income, as buy to let still offers excellent returns. There will always remain a high demand for rental accommodation with increased immigration, a growing population and renting remaining a popular lifestyle option. However, the heightened sensitivity to changes in interest rates will make property investors think carefully before committing to invest in a property.”
