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Ash4781

90pc Of Mortgage Borrowers Opt For Fixed Rates

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http://www.telegraph.co.uk/finance/persona...ixed-rates.html

Eighty-seven per cent of residential borrowers chose a fixed rate in the second quarter, compared with 71pc in the first three months of the year, L&G's Mortgage Purchase Index found. The index analyses trends from thousands of mortgage applications made through L&G's Mortgage Club.

The analysis also found that the average two-year fixed rate increased to 5.46pc from 4.78pc in the first quarter, although the average fixed rates over three, five and 10 years all fell. The average residential loan was for 60pc of the property value, whereas in the buy-to-let sector it was for 70pc.

Stephen Smith of Legal & General said: "Borrowers who are prepared to take out variable rates have been few and far between in the past three months. And who could blame them? Margins on these products are high and it's almost a cast-iron certainty that when the base rate next moves, it will be upwards.

"Fixed rates had been offering the full package until recently – they had been getting cheaper and they offer valuable peace of mind in a turbulent and uncertain environment. Some of the fixed rates on offer have been very good value, but many are now very much on the rise.

He added: "It feels as if we are entering a new phase of the credit crunch now – talk of a recovery has been gathering pace and fixed-rate pricing may well have bottomed out.

"There has been no significant upturn in house sales or mortgage lending, but both consumer and adviser confidence is up. Let's hope this translates into real results."

Several lenders have increased the cost of fixed-rate mortgages recently, including Nationwide, Barclays and Abbey.

Is there a way out of this if banks won't budge on their high margins?

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Anyone else find this surprising?

I would have thought the general public would have seen a fix at 5.5% and a tracker at 2.5% and not taken a second thought about picking the cheap tracker?

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Anyone else find this surprising?

I would have thought the general public would have seen a fix at 5.5% and a tracker at 2.5% and not taken a second thought about picking the cheap tracker?

Even in the boom, fixes were a significant majority of deals, I'd guess 60% or so.

It just goes to show that most people are quite willing and able to pay 5% to 6% for mortgage finances, they were at 2007 prices, and they are at todays prices.

I reckon most people coming off fixes today should revert to SVR though, and save themselves a fair bit over the next 2 years before reverting to a fix at 5% or 6% again when the recovery is more firmly embedded. But maybe not, most people are probably happy to pay a bit more for the security of knowing their payments won't rise.

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I reckon most people coming off fixes today should revert to SVR though, and save themselves a fair bit over the next 2 years before reverting to a fix at 5% or 6% again when the recovery is more firmly embedded.

What if their LTV does not allow that?

What if 5% or 6% fixes are not available?

VB

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What if their LTV does not allow that?

What if 5% or 6% fixes are not available?

VB

Some lenders are now offering fixes for 95% + LTV's to existing customers only. And also at preferential rates versus new customers.

There was a thread about it a few days ago.

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Some lenders are now offering fixes for 95% + LTV's to existing customers only. And also at preferential rates versus new customers.

There was a thread about it a few days ago.

Indeed. What about in two years time though?

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Anyone else find this surprising?

I would have thought the general public would have seen a fix at 5.5% and a tracker at 2.5% and not taken a second thought about picking the cheap tracker?

Everyone knows these low rates won't last forever so take a gamble on rates rising sooner rather than later and opt for the reasonably low long term fix. It's obvious I would have thought - why ask?

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