Hamptons data revealed there was almost a 9 per cent increase in the number of borrowers choosing two-year fixed products in January 2007, compared with December 2006.
In addition, since the first Base Rate hike in August 2006, there has been a rise of more than 31 per cent, with 24.35 per cent of borrowers taking out two-year fixed rate mortgages in July 2006, extending to 55.43 per cent in January 2007.
However, while more borrowers were adopting a fixed approach to their borrowing, few were choosing to fix for longer than two years, with the data showing only a 0.86 per cent increase in longer term fixed deals between December 2006 and January 2007.
Hamptons said this could be a sign that borrowers are still holding out for a Base Rate reduction and are willing to gamble that this will occur within the next two years.
Jonathan Cornell, technical director at Hamptons International Mortgages, commented: “
After three rate hikes over six months it is not surprising that borrowers have began to rethink their position and many have decided to play it safe with fixed deals. The fact that many have chosen to opt for just two-year products is interesting and I would not like to say at this stage whether the gamble will pay off.”
Paul Suchet, managing director of Money Plus, said: “I believe inflation is improving and rates will not go up again. Even though many borrowers agree, they are playing it safe, but staying in the deal for the shortest time possible.”
