Fixed-rate mortgage take-up shows first signs of slowing
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The number of borrowers opting for fixed-rate deals has fallen for the first time in a year, according to John Charcol.
The latest mortgage index from the brokerage shows the proportion of borrowers choosing a fixed rate fell to around 50 per cent in March from 56 per cent in February.
It is the first fall in borrowers choosing a fixed rate since March 2010, a year after the Bank of England cut bank rate to an all-time low of 0.5 per cent.
At that time, 17 per cent of borrowers were choosing a fixed rate.
John Charcol senior technical manager Ray Boulger says borrowers are being put off fixes because of the higher rates now available compared with trackers.
He says: “We expect take-up of fixed rates to decline further until the best five-year rates fall back below 4 per cent to reduce the premium over variable rates to a more acceptable level.”
Purchase activity accounted for 53 per cent of John Charcol’s mortgage business in March, up from 45 per cent in February.
Coreco director Andrew Montlake believes there is still demand for fixed rates: “A lot of people in this uncertain market would rather pay a little bit extra and fix in order to make sure they do not have sleepless nights.
“Trackers may be better value now but they could be struggling in two years time if rates have risen more than expected. Borrowers should not buy mortgages based on perceived value but on suitability.”
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