The activities of Countrywide’s 700 mortgage consultants reveal a huge shift in favour of fixed interest rate products, which have reached levels not seen since October 2009.
The split between fixed and tracker applications has jumped 19% since January 2010, with a 7% increase in the last month alone.
The figures suggest that homemovers appear to be prepared to accept the higher interest rates that typically come with fixed rate mortgages.
Overall the average interest rates of Countrywide’s Top 10 mortgages in the first six months of 2010 was 4.62%, a 0.67% decrease from the same period in 2009 when the average interest rate was 5.29%.
Remortgage customers are also opting for fixed rate products in 78% of mortgage applications – a 4% increase on the previous month and a 10% increase in Q2 2010 compared to Q1 2010.
Grenville Turner, Countrywide’s Group chief executive said: “Despite the Bank of England’s best efforts to hold base rates at a record low of 0.5%, the mortgage market remains in an extremely fragile state. Overall mortgage approvals are up by 9% which sends a strong signal to the industry and lenders have also increased the volume of products available by 193% compared to June 09 which provides some reassurance.
“The popularity of two year mortgages over longer-term products indicates that any nervousness over unemployment and government spending cuts is currently a short-term concern.”
Grenville added: “The recent Bank of England Credit Conditions report revealed that lenders are becoming nervous about the cost of wholesale lending – if this transpires into the mortgage market through tightened lending criteria, we will see a significant impact that could damage any chance of a recovery in the property and mortgage markets.”
