This reflects a continued flight to security among consumers following the succession of base rate rises this year.
Even though base rates remained unchanged in October and are widely predicted not to rise more than an additional 0.25% before the end of this year, in September 50% of MAB customers opted for 2 year fixed rate mortgages, 4% for 3 year fixes rate mortgages, and a sizeable 13%, or 1 in 8 customers, for 5 year fixes.
After fixed rate products, tracker mortgages proved next most popular, with 21% of customers choosing them in September. Twelve per cent of customers opted for discount products.
Of business undertaken by Mortgage Advice Bureau, 26% related to First Time Buyers, 27% other new purchase, 26% remortgage, 11% buy to let and 10% self certified. MAB reports that mortgage sales have been at a steady level for the past 3 months, and it expects this trend to continue to the end of 2004, then for volumes to rise through to the middle of 2005, largely as a result of increased remortgaging business.
Peter Brodnicki, Chief Executive, Mortgage Advice Bureau commented: “The majority of people have clearly been shaken by this year’s rate rises and have no further appetite for uncertainty where their mortgage repayments are concerned. They want the security that a fixed rate mortgage provides, even if it costs more initially than would be the case if they opted for a discount or tracker product. We think it is particularly significant that 1 in 8 customers is choosing a 5 year fixed rate term – perhaps UK customers’ attitudes towards longer term products is changing. This is a trend that we will be monitoring carefully.”
