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Fixed rate mortgage take up plummets to 26 per cent

Wednesday 18th November 2009

Fixed rate mortgages have seen a swift reversal of fortunes with their popularity falling to its lowest level since November 2008.

According to the John Charcol index, the products have fallen from a market share of 83.1 per cent only four months ago to attract just 26 per cent of applications in October.
 
Drew Wotherspoon of John Charcol said: “The roller coaster movement in product choice reflects the rapid change in mortgage pricing and interest rate sentiment over the last year. With the outlook for interest rates little changed over the last month an even higher proportion of borrowers chose a variable rate mortgage, in most cases a tracker.”

He said the recent extension to the Bank of England’s Quantitative Easing programme by a further GBP 25bn means interest rates are likely to stay low for the next few months.

“Even if longer term fixed rates don’t get much cheaper than those currently available at just under five per cent, there seems a good prospect that borrowers on a variable rate will be able to benefit from rates more than two per cent lower for the time being and then switch to a similarly priced fixed rate later,” he added.
 
The index also showed a marked increase in purchase and first-time buyer activity. October figures showed first time buyer (FTB) numbers leaping to 15.3 per cent, up from 10.4 per cent in September.

Charcol said the fact several lenders have improved their pricing and availability of mortgages to 85 per cent and 90 per cent over the last month has been encouraging for would be FTB s.

 









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