Data for February showed that 87 per cent of first-time buyers chose a fixed-rate loan - up from the previous record of 84 per cent in January, and 82 per cent in the same month last year. February's data also showed that 70 per cent of home movers also took out a fixed-rate deal, compared to 67 per cent in the previous month. And overall, fixed-rate loans accounted for 76 per cent of all loans for house purchase - returning to their highest-ever level last achieved in November 2005 when they also reached 76 per cent.
Fixed-rate deals remain attractively priced compared to other products. Since August 2006 the price of fixed-rate deals has increased by just 0.16 per cent, while discounted, tracker and standard variable-rate products have increased by more than 0.5 per cent. The average interest rate on a fixed-rate loan in February was 5.34 per cent, up from 5.27 per cent in January. Discounted variable-rate products reached 5.68 per cent in February, up from 5.54 per cent in the previous month.
Michael Coogan, director-general at the CML, said: "With the chance of at least one more interest rate rise this year, first-time buyers are taking the sensible option of taking out fixed-rate deals, and locking into the payment security they provide. First-time buyers are the most financially stretched group, and the fact that a record number of them are choosing a fixed-rate deal demonstrates their desire to plan ahead and avoid the risks interest rate rises would bring."
