There has been an increasing demand for five-year fixed rate mortgages as borrowers seek to fix their mortgage over a longer term.
Accord Mortgages, which is the intermediary lending arm of Yorkshire Building Society, says that appetite for five-year fixes has grown, particularly amongst remortgagers. It saw remortgage applications rise by 30% in December compared to January 2017.
November saw the biggest month-on-month increase in five-year fix remortgage applications by 10%, perhaps prompted by the Bank Rate announcement in November and subsequent rate rise. This trend continued into December with two in five remortgage customers applying for a five-year deal.
House buyers were also keen to lock in to a good rate for longer, with Accord seeing an11% uplift in applications for five-year home purchase loans in December compared to January 2017.
David Robinson, national intermediary sales manager at Accord, said: “Due to the competitiveness of five-year deals at the moment borrowers feel they will save more money in the long run by plumping for a longer-term fix.
“For instance, there is currently a 0.15% rate difference between a market average two-year fix at both 60% and 65% loan-to-value (LTV) at a rate of 1.73% and Accord’s 1.88% five-year remortgage deal at the same LTV.
“The changing economic, social and political landscape over the past year may have made borrowers nervous.
“However, our figures show that brokers have navigated clients through the challenges by advising that securing a competitive rate for longer is best for them.
“In the run up to the Bank Rate rise borrowers opted for a five-year fix. Given that’s just a taste of where rates are expected to go, it’s clear borrowers crave the assurance of knowing exactly how much their monthly repayments will be over the next 60 months, which must be a comfort given changeable external factors influencing interest rate flux.”
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