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Fixed-rate mortgage demand rises

The proportion of homeowners opting for fixed-rate mortgages has risen for the fourth month and now stands at 65.7 per cent, figures show.

The Mortgage Advice Bureau said people seem to be taking advantage of record-low interest rates and protecting themselves against any future interest rate rises, at least for the short term.

Experts are undecided over when they expect interest rates could begin to creep up, although it is clear they will only go in one direction - meaning variable rate deals have been falling in popularity.

The proportion of consumers with fixed-rate loans hit the latest peak in November, rising from 63.6 per cent in October, figures from the Mortgage Advice Bureau/Coreco national mortgage index show.

This compared with just 46.3 per cent of applicants that chose fixed-rate deals in January 2010, as there was a bigger gap between the cost of fixed and variable rate loans at the time.

Mortgage experts have advised consumers opting for fixed-rate deals to choose one that lasts for at least three years, so they will benefit from being protected from rate rises until 2014.

But lifetime mortgages that last for 20 or 25 years have also been a popular choice as homeowners look to lock in record-low interest rates for even longer.

Loan to values rates (LTVs) on purchase mortgages fell slightly to 70.1 per cent in November.

The average loan size for purchase mortgage applications increased from £123,982 in October to £126,162 in November, a rise of 1.8 per cent.

The average deposit put down by a purchase mortgage applicant was £37,722 in November.

Copyright © Press Association 2010

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