There has been an increase in borrowers taking out five-year terms, increasing from 24 per cent in the fourth quarter last year to 28 per cent in Q1 2014 and up to 30 per cent in Q2, according to buy-to-let lender Paragon Mortgages’ quarterly intermediary survey.
The poll found that for initial product periods, two-year terms continue to be the most popular among borrowers, accounting for 49 per cent of all fixed rate and tracker mortgage cases, although that figure was down from 53 per cent from Q1.
Elsewhere, the proportion of fixed rate products processed during the second quarter rose to 80 per cent of intermediary mortgage business, from 77 per cent in Q1.
In the second quarter there was also a 4 per cent reduction in the number of tracker products being processed by intermediaries, a second successive fall in numbers for this interest rate type.
John Heron, managing director of Paragon Mortgages, said: “The decrease in two year initial terms reflects the increasing popularity of three and five year options.
“This shows that longer initial terms are increasing in popularity among borrowers, despite two year terms holding the top spot. It is encouraging to see further improvement in the numbers of longer-term cases being processed.
“This also reflects the continued more cautious attitude among borrowers, considering the greater stability and predictability provided by longer-term options.”
