Fixed rate products becoming ever-more popular

  • Story by: Gemma Westacott
  • Magazine: FTAdviser
  • Published Monday , May 12, 2008

Almost 80 per cent of borrowers applying for new mortgage opted for a fixed rate product in April, according to Charcol's Mortgage Monitor.

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The latest Mortgage Monitor report, which measures mortgage activity at application stage, highlights that the trend towards fixed rates is continuing, with 78 per cent of mortgages arranged in April being for fixed rate products. This is up from 64 per cent in March.

Charcol technical manager Katie Tucker said: "These peaks normally occur when Bank rate rises are expected, but as bank rate is widely expected to fall over the next year most of the high take-up was because fixed rates were a quarter to a half a percent cheaper than trackers.

"Nonetheless, this second consecutive jump may also imply that borrowers are nervous about the strength of the economy and fear that rates will soar as they did in the early '90s, but such a hike is extremely unlikely.

"The economy as a whole is strong, economic growth is a priority for the MPC, and unlike during the early '90s, when bank rate policy was straight-jacketed by the Exchange Rate Mechanism, we are unlikely to fall into such a recession."