Fixed Rate Mortgages increase in popularity

New data published this week from the Council of Mortgage Lenders reveals that in April fixed rate mortgages accounted for 71% of all loans for house purchase and remortgage.

This figure is 2% higher than in March, and 17% more than in April 2005. The increasing popularity of fixed rate products reflects attractive deals being offered by lenders coupled with consumers wanting to lock into low-rate long-term deals.

Their survey also found that loans for house purchase accounted for 46% of all loans in April - up from 43% in March, but slightly lower than the 45% achieved in the same month last year. Remortgaging accounted for 36% of all loans, and this is slightly lower than in March, but down by 5% on April 2005.

Loans to first-time buyers totalled 30,700 in April and the survey reveals that the average first-time buyer loan size is now £106,400, up from £103,839 in March and significantly higher than the £94,995 in April last year.

In April, first-time buyers borrowed 3.21 times their income to get a mortgage, up from 3.15 times in the previous month. However, mortgage interest payments as a proportion of income have actually fallen to 16.2%, from a peak of 17% in June 2005.

Commenting on the figures, CML director general Michael Coogan said: "Today’s data confirms that the market is in good shape. The strong take-up of fixed-rate deals is encouraging because they give consumers confidence in their mortgage payments and allow them to plan ahead financially."

"It is also interesting to see that while both first-time buyers and movers are borrowing a greater multiple of their income to get a mortgage, their payments as a proportion of income are lower than in the same period last year. This is potentially due to the higher take-up of attractive fixed-rate products over the past year."

Author: Tom Higgins

New data published this week from the Council of Mortgage Lenders reveals that in April fixed rate mortgages accounted for 71% of all loans for house purchase and remortgage.

Published on 19/6/2006.

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