In the last quarter, the number of fixed rate mortgages dropped from 75 per cent of all home mortgages to just 63 per cent.
According to Legal & General’s Mortgage Purchase Index, the fixed rate mortgage is still the most popular mortgage type and the clear runner in the index.
“As suspected, the popularity of fixed rate mortgages peaked last quarter when we found that three-quarters of borrowers were taking this type of mortgage, compared to 63 per cent in Q3,” stated Stephen Smith, Director of Housing at Legal & General.
The Legal & General report stated:
“Fixed rates are nowhere near as popular for buy-to-let mortgages as they are for residential mortgages. Many of the more recent exclusive mortgages agreed with lenders through the Legal & General Mortgage Club have been trackers rather than fixed rates.”
Fixed rate mortgages do have the advantage for the borrower that they can be certain of what their mortgage interest rate and payment will be for the length of the arranged deal, however, it also means that borrowers would not benefit from interest rate cuts, such as those seen in the last couple of months.