Mortgages

Number of five-year products doubles in five years

The figure is just five products short of the number two-year fixed rate products on the market

Rozi Jones
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16th September 2019
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"Borrowers now have an even choice of products available in both the two and five-year fixed rate mortgage markets."

The number of five-year fixed rate mortgages currently available in the market has almost doubled to 1,542 over the past five years, according to Moneyfacts data.

This figure is just five products short of the number two-year fixed rate products on the market, which currently stands at 1,547.

Five-year fixed deals at 75% LTV has seen the largest increase of 165 in product numbers, from 138 in 2014 to 303 this month, while those borrowers who can raise a deposit of 10% have 135 additional products to choose from and are now able to select a deal from a total of 267 five-year fixed rate products.

Darren Cook, finance expert at Moneyfacts, said: “Two-year fixed rate mortgage deals have historically dominated borrower market choice, however with the number of five-year fixes increasing significantly over the past five years, it is clear that borrowers now have an even choice of products available in both the two and five-year fixed rate mortgage markets.

“Data recently released jointly by the Bank of England and the Financial Conduct Authority* shows that the dominance of fixed rate mortgage approvals has grown over the past five years. Outstanding balances on existing fixed rate mortgages constituted 41.66% of the entire market in Q2 2014, whereas this figure has grown to 73.84% in Q2 2019. It also appears that the fixed rate market is expected to increase further still, as latest figures show that 92.36% of all new mortgages advances in Q2 2019 were fixed rate deals.

“With average fixed interest rates currently near historic lows, there is competition among mortgage providers to not only to grow their mortgage books, but they are fiercely competing to make sure that their mortgage rates appear competitive to retain their existing borrowers, making sure that they do not drift away to another mortgage provider.

“Historically, borrowers seemed to have preferred the short-term commitment of a two-year fixed rate deal, but now that product availability has significantly increased in the longer-term five-year mortgage market, borrowers may be looking beyond interest rates and more towards the stability of setting monthly mortgage repayments and hedging themselves against uncertain economic conditions in the longer term.”

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