Borrowers look for longer fixed-rate mortgages
Borrowers are looking to take advantage of low interest rates and fix for longer, according to a new report.
Mortgage broker Mortgageforce finds 56 per cent of deals going through are for mortgages longer than three years.
The rise in longer fixes comes as trackers and two-year mortgages lose favour.
Katie Tucker, Mortgageforce technical manager, said: "Two year fixes were always the favourite, or trackers when Bank Rate is widely expected to fall, but this rush to commit long term shows that consumer attitude has turned a corner."
She stated borrowers were choosing to commit now as they weigh up the chances of lenders realistically cutting rates any further versus the chance of Bank Rate being increased in the next few years.
The choice of longer-fixes, however, comes at a cost - with two-year deals tending to be cheaper.
"It seems borrowers are choosing to pay marginally more for a recession buffer that will tide them over for as long as possible," Ms Tucker claimed.
"Even many borrowers benefitting from their lenders' very low standard variable rates are choosing to switch to a fixed rate now that will keep their payments low and give better value if the variable alternatives start to increase."
Mortgage force reports the Santander lenders are proving most popular with Abbey's three-year fix at 4.14 per cent with £995 fee and Alliance & Leicester's five-year mortgage at 4.79 per cent also with a £995 fee leading the chase.
The deals have loan-to-value levels of 70 per cent and 75 per cent respectively.
Ms Tucker added she had also seen a record level of ten-year fixes being taken this month as prices are "so historically competitive".
"The initial consultation with most brokers is free so I strongly recommend borrowers at least get a quote of what they could sign up for now," she concluded.
Mortgage lending, however, remains depressed. Yesterday the British Bankers' Association (BBA) reported mortgage approvals down 54.4 per cent on a year ago.
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