Fixed rate mortgages top for 87%

24 June 2009 / by Rebecca Sargent
Fixed rate mortgages were the deal of choice for 87 per cent of people who made mortgage applications in the last quarter through Legal & General's Mortgage Club.

The fixed rate mortgage statistics are testament to the mortgage market at the moment as the Bank of England keeps base rate at its rock bottom of 0.5 per cent, suggesting that interest rate inclines are imminent.

The number of borrowers choosing a fixed rate mortgage has increased from 72 per cent in the first quarter of 2009.

Commenting, Stephen Smith, director of housing at Legal & General said: "Borrowers who are prepared to take out variable rates have been few and far between in the past three months. And who could blame them? Margins on these products are high and it's almost a cast iron certainty that when the base rate next moves, it will be upwards.

"Fixed rates had been offering the full package until recently, in that way they had been getting cheaper and they offer valuable peace of mind in a turbulent and uncertain environment.

"Some of the fixed rates on offer have been very good value, however many are now very much on the rise," he added.

In fact, statistics from Moneyfacts revealed that the average interest rate on a five year fixed rate mortgage increased by 0.21 per cent last week alone.

Nevertheless, the increases could be read as a positive sign for the economy, Mr Smith added: "It feels like we are entering a new phase of the credit crunch now though – talk of a recovery has been gathering pace and fixed rate pricing may well have bottomed out.

"There has been no significant upturn in house sales or mortgage lending, but both consumer and adviser confidence is up. Let's hope this translates into real results," he concluded.

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