The survey indicated a fear of rising interest rates has caused a surge in the popularity of fixed rate mortgages, but was also a reason for a decline in the number of first-time buyers (FTB) within the housing market.
Another trend indentified by the survey was a decline in the number of people opting for interest only mortgages, while the research indicated borrowing on existing homes was a growing practice.
It further revealed high buy-to-let (BTL) mortgage rates were putting off potential landlords.
My Mortgage Direct’s survey revealed borrowing on existing homes continued to prove a popular way for many homeowners to finance their lifestyle, with applications for remortgages increasing by 31 per cent over the previous quarter.
The decline in interest only mortgages was a factor that Cath Hearnden, director at My Mortgage Direct was pleased to see. She said: “From a nerve-jangling high of 55 per cent at the end of 2005 they have dropped back by 10 per cent over the last six months to an average of 40 per cent.”
However, Paul White, consultant at Belgravia Insurance Consultants, disagreed with the survey’s findings. He said: “Most potential house buyers are looking for the cheapest deal. I think a home buyers priority is getting the lowest possible price at the moment rather than the risk.”
He added: “The uncertainty over interest rates has been exaggerated. The buoyancy of the FTB market comes down to the affordability of houses at the moment.”
