Hamptons Mortgages said it had seen the proportion of longer term variable rate lending rise by 13 per cent in the last month alone. The brokerage also reported an increase in the proportion of longer term fixed lending by 4.5 per cent since September, in contrast to a decrease in the amount of two and three-year variable lending seen in the last month.
Hamptons claimed that borrowers were opting for longer term mortgages to avoid short-term financial instability. Furthermore, statistics showed that the proportion of loans taken for home purchase in October dropped over 10 per cent since September and over 26 per cent year-on-year.
On the other hand, data indicated that buy-to-let saw an increase of 25 per cent in the last month, which showed that the sector remained resilient and was one growth area that may continue to ride out the ‘credit crunch’ storm.
Jonathan Cornell, managing director of Hamptons Mortgages, said: “Last week, predictions of interest rate direction in the New Year were rife, with some suggesting they will return to a low of 4.75 per cent. It strikes me as unlikely that they will go as low as this, but it is a strong possibility there will be a cut in the first few months of 2008. Should this happen, those moving to variable rate mortgages now will be laughing.”
Jock Cassidy, managing director of Ashley Law, said: “There’s a lot of uncertainty and unless a fixed rate is essential, we would recommend a variable rate as a decent alternative.”
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