Affordability is the key constraint for the large majority of homeowners and higher loan to value (LTV) mortgages have subsequently risen to the greatest levels for a year.
The number of homeowners opting to borrow at least 95 per cent of their propertys value has risen by 6 per cent since April 2006 to hit todays level of 16 per cent, although the majority of borrowers are making sure they factor further rate rises into their calculations.
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Two year fixed rates are the most popular mortgage at the moment, undeniably dominating the market after 92 per cent of all borrowers opted to fix their interest rate.
Steve Cox, Spicerhaart Financial Services operations director said: The Bank of Englands decision to raise the base rate to 5.5 per cent this month to counter rising inflation was widely predicted. However borrowers are aware of the need to keep their finances under control and have sensible opted for fixed mortgage to give themselves security during this period of high interest rates.
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Buy-to-let mortgages are also strong at the moment, holding their own with a 14 per cent share of the market. Cox adds: Despite commentators stating that buy-to-let lending is tailing off, it can still offer a sound long term investment with good returns. This latest interest rise may cause a slight dip in this type of borrowing however, and investors will need to think carefully before committing to mortgage repayments on additional properties.
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