Fixed-rate mortgages: Top of the popularity polls

Borrowers: more than half are choosing fixed-rate mortgages

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Wednesday, 05, Mar 2008 11:20

Fixed-rate mortgages showed a surprisingly high increase in popularity in February, being chosen by a huge 52 per cent of borrowers.

The soaring take-up has shocked mortgage brokers who are more used to seeing around 33 per cent of borrowers opting for fixed deals.

Katie Tucker, technical manager at mortgage broker John Charcol, said the sudden surge in popularity could be down to customers rushing to take advantage of some of the "ultra-low" fixed-rates which have come on to the market.

They include a 4.75 per cent rate from First Direct and 4.99 per cent from Abbey, both products which protect borrowers from any potential hikes in interest rates.

Ms Tucker said that might not be the only reason. She added: "January is always an unusual month for activity, this one being especially tumultuous, so an increased fixed-rate take up in February may be the result of January's cautious buyers returning late, having given the market time to settle."

The broker's figures showed, while January was characterised by borrowers mainly taking out the "bread and butter" mortgage which are constantly in demand whatever the conditions, February showed all mortgage types were becoming more active.

However, Ms Tucker said next month's figures would provide a clearer picture of how the mortgage market was evening out.