New figures released by Moneyfacts show that eight of out every 10 borrowers who sought a mortgage during August were aiming to secure a fixed-rate loan.
Breaking down these figures by the length of loan being sought, 28% of borrowers – more than one quarter – were in the market for a fixed-rate mortgage with a five-year term. On the other hand, 36% – which adds up to more than one third – wanted one that would run for two years. Five-year and two-year options account for the vast majority of such loans available from lenders – almost nine out of 10 of them.
Darren Cook, who works for Moneyfacts as its Analyser Products Head, has suggested that this is due to lenders understanding the needs of customers. However, some borrowers are looking for a product that has a longer repayment term in the wake of the pandemic, with fixed-rate 10-year loans now sought by almost 9% of borrowers.
Moneyfacts has also pointed out that the ‘rates war’ among lenders is keeping fixed loan rates low, with average rates for five-year loans reduced from 3.04% to 2.63%. For two-year loans, they have fallen 0.08% to 2.38%. Cook went on to tell Mortgage Solutions that:
“Mortgage consumers appear to appreciate the effect the Bank of England base rate and future inflation rates may have on interest rates as a whole and what type of mortgage they are looking at applying for.”
This certainly indicates where advisors with CeMAP training should be focusing their efforts.