Borrowers are increasingly fearful that low levels of interest rates will not hold over the next five years despite the Bank of England holding the rate at 4.75 per cent for the second month. With two-year fixed rates still remaining popular, the total number of fixed rate mortgages has crept up to 92 per cent of all mortgages taken out, the highest this year.
Peter Gladdy, director of Mortgages Direct, commented: “Immediately after the interest rates increased in August we saw the proportion of two-year fixed rate deals rise as borrowers became more concerned about further rate rises in the next few months. In September, the popularity of fixed rate mortgages continued to remain high but a greater percentage of homeowners are now opting to secure a fixed rate mortgage for a longer period. Consumers seem to have a bleak outlook on the long term stability of the housing market economy.”
The survey also revealed that the level of first time buyers dropped back in September following the Bank of England’s decision to increase the interest rates to 4.75 per cent in August. The proportion of first time buyers decreased to 35 per cent in September from 39 per cent in August.
Gladdy said: “It is quite common for the number of first time buyers to fall back this time of year, buyers put off purchasing a property until the new year. However, the drop is significantly more than we would usually expect. It seems the latest hike in interest rates was particularly bad news for first time buyers, who are finding it increasingly more difficult to get on the property ladder. Any further rise could significantly dampen activity in the housing market.”
