Borrowers choosing long term fixed deals for security

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Borrowers choosing long term fixed deals for security

Fri 11th Jul 2008

Uncertainty in the property market is leading borrowers to turn to long-term fixed deals, the latest monthly mortgage survey from Spicerhaart Financial Services has found.

The number of short term two-year fixed deals has dropped to just over 18 per cent from 60 per cent in June 2007, Mortgage Introducer reports.

But long term fixed rates ones for four years or longer are above 34 per cent.

Borrowers are also turning from variable to fixed mortgages.

The number of those choosing variable products fell to 14.7 per cent last month - having been 28.7 per cent in January.

An average two-year fixed mortgage is 7.07 per cent, compared to 6.93 per cent for a five-year deal.

Research from the Fair Investment Company this week found medium term fixed-rate deals (between five and ten years) to be the top choice, with one third of those polled preferring them.

After two year fixed-rate deals hit a ten-year high of seven per cent in June, 25 per cent of those questioned still said they would continue to choose such mortgages.

James Caldwell, director of Fairinvestment.co.uk, said this suggested that people do not expect the mortgage market to recover within five years.

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