Fixed rate mortgages gain in popularity

According to the latest figures from the Council of Mortgage Lenders (CML), nearly 70% of borrowers took out fixed rate mortgages in April.

The share of fixed rate mortgages, at 70%, was the highest level since June 2008.

The average interest on the mortgages was 4.83%.

The number of mortgage loans taken out for house purchases rose in April but compared to the average for April over the last 7 years it is still very low at 35,600 loans compared to 88,000 as the average.

The number of remortgages further declined as a result of the low standard variable rates on offer and the fact that the best mortgage deals come with stricter credit criteria, including in many cases the need for high percentage deposits.

For first time buyers, most were able to find a 25% deposit and on average borrowed 2.96 times their income.

Bob Pannell, CML head of research, said ‘With the interest rate cycle at its floor, an increasing proportion of borrowers are taking out fixed rates, including for longer term periods of 5-10 years. With expectations for rates to remain low in the near future, shorter term fixed-rate deals are less appealing than attractively priced variable rate deals.’