There has been a steep rise in the number of borrowers looking for longer-term fixed-rate mortgages since the Bank of England (BoE) raised interest rates last month.
That’s according to Yorkshire Building Society which has reported a 13% increase in the number of borrowers applying for five-year fixed-rate mortgages since the BoE’s monetary policy committee voted to increase its base rate by 0.25% to 0.75%.
This surge in interest for the longer-term products would suggest many borrowers want the reassurance of a fixed rate in order to shelter from future interest rate rises, which are widely predicted.
Earlier this week, experts at Moneyfacts.co.uk said a quarter-point rise was expected in the foreseeable future.
Its finance expert, Charlotte Nelson, urged borrowers to opt for a fixed deal to protect themselves against future rate rises.
But Janice Barber, mortgage manager at Yorkshire Building Society, said its figures showed many borrowers were already doing this.
She said: “Five and ten-year fixes have proved popular so homeowners clearly value the stability fixed mortgage rates offer and the peace of mind of knowing exactly what their monthly repayments will be for a period of time.
“The demand for longer-term fixes also suggests mortgage holders expect interest rates to continue rising, and that by reviewing their accounts now believe they may be able to get a better deal while rates are low.”
Indeed figures released by Experian’s comparison services in August showed an increase in borrowers looking for fixed-rate deals in July in preparation for August’s predicted rise in rates.
The Yorkshire currently offers a five-year fixed rate of 2.19% at 85% loan-to-value (LTV), with a £1,495 fee, available to both homebuyers and those remortgaging with smaller deposits.
Alternatively, borrowers looking to remortgage and who require a mortgage at 60% LTV could choose a fee-free five-year fix at 2.13%, with free standard valuation and free legal fees.
