A staggering 86% of all house purchases and remortgages in August were taken out with a fixed rate mortgage deal. This is compared to 67% for August 2012 and 77% at the peak of the housing boom in August 2007.
The popularity of fixed products is in part due to the historically low rates currently available. The average rate in August 2013 was 3.31%, compared to 4.25% and 5.86% for the same periods in 2012 and 2007 respectively.
Legal & General Mortgage Club suggests that now could be the best time for homebuyers to fix their mortgages, with the products currently available at all time low rates.
Martyn Smith, Head of Products, Legal & General Mortgage Club says:
“We appear to be approaching the bottom of the interest rate curve, with most forecasts saying that the next rate move is likely to be upward. Borrowers and homeowners considering whether to fix should take a close look at products now whilst these exceptional rates are still available.
“There are a variety of options out there for people with a range of deposits. For those with a 15% deposit Accord Mortgages has a two year product at 3.19% with a fee of £845, whilst Leeds Building Society offers a rate of 3.39% with a £199 fee. At the other end of the spectrum, Nationwide offers a two year fix for just 1.94% on 60% LTV products.”
Martyn Smith, Head of Products, Legal & General Mortgage Club continues:
“Although rates were significantly higher in 2007, due to the uncertainty in the market there was still a high take up of fixed rate products. Borrowers were paying more for a fix, but they were happy to do so for the security it offered. The dip in fixed rate take up in 2012 came amidst the third consecutive year that Bank Base Rate was held at 0.5%. With no immediate signs that it would change, tracker mortgages became increasingly popular.
“Despite Mark Carney’s forward guidance over the summer, it would seem that now consumers are planning further ahead and looking to tie in to deals they know they can sustain in the future.”
