In January, 28 per cent of those asked as part of Abbey Mortgages’ Remortgage Index said that if they were remortgaging tomorrow, they would opt for a variable product, in May, this was just 15 per cent.
Finally it seems borrowers are getting the message that now is the time to fix as rates are as low as ever. In May, for the first time since January 2009, the number of people planning to fix their mortgages when they remortgage has increased to 60 per cent, up eight per cent from 52 per cent. It’s a step in the right direction as lenders have been urging borrowers to fix now for a while.
While the Bank of England base rate is at an historic low of 0.5 per cent, 73 per cent believe that it has reached the bottom and can only rise in the longer term. This has renewed appetite for homeowners to secure a low fixed rate mortgage whilst they can, with demand rising two per cent since January.
The most popular mortgage choice is a two year fix with 21 per cent opting for this. Demand for longer term fixes is to turn a corner as borrowers look for indicators of when rates will rise again before locking in to a longer term deal.
The research also shows 36 per cent of people opted for a fix of between 3 and 10 years, with the most noticeable difference is with 10 year fixes, where demand has doubled since January 2009.
Nici Audhlam-Gardiner, Director of Mortgages at Abbey commented: “Fixed rates are firmly back on the agenda for those looking to remortgage. The last few months of 2008 saw a huge focus on the Bank of England’s Monetary Policy Committee as rates shot downwards each month. As mortgage borrowers realise that variable deals will no longer fall further, it seems that many are now trying to work out when rates will rise again and how long to fix their rate for.
“Borrowers should avoid holding out too long before fixing as rates as low as these won’t last forever.”
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