"In June the proportion of our clients choosing fixed rates increased further to a record 83.1%, taking the average for the last 4 months to 81.2%. However, we expect 83.1% will prove to be the peak for fixed rates for the foreseeable future because after the sharp increase in fixed rate pricing over the last few weeks, compared with little change in tracker rates, the relative attraction of fixed rates and trackers has moved towards trackers unless one expects interest rates to start increasing rapidly before 2011." comments Ray Boulger of John Charcol.
"Fixed rates are likely to continue to be the choice of the majority of clients for some time because for many the security offered by a fixed rate is paramount, especially for those on higher LTVs. However, we are recommending trackers to more clients this month, with the focus on low or no early repayment charges (ERCs) as well as the obvious requirements of a good rate and fee combination and possibly an offset facility. The reason the size of the ERC is important, unless the mortgage offers a droplock option, is that many clients will want to consider switching to a fix when the time is right for them."
Boulger continues, "There was no material change in the proportion of first time buyers last month but remortgage activity, which includes clients effecting a product transfer with their lender, held up well to take a little over 50% of total business."
The John Charcol Mortgage Index is published monthly, tracking three important statistics, based on mortgage business written by John Charcol. The index is a leading indicator of trends being based on mortgage applications submitted to lenders, whereas figures reported by the Council of Mortgage Lenders (CML) and the Bank of England (BofE) are based on completions, which typically take place 2-3 months after the mortgage application is submitted.
The three statistics tracked each month are the percentage split:
Between Fixed rates, Capped rates and Tracker/Discount rates.
Between Purchases and Remortgages.
Of First Time Buyers compared to all Purchasers.
