Press
Borrowers are picking up fixed rates: CML
by Joy Dunbar
FinancialAdviser 18th June 2009
The take-up of fixed-rate products increased as the interest rate cycle reached the floor in April, according to the Council of Mortgage Lenders.
Less than 70 per cent of borrowers took out fixed rates in April with an average rate of 4.83 per cent, the greatest share since June last year.
Gross mortgage lending in April was £10.5bn, down from £11.5bn in March, according to the CML's figures.
There were 22,100 loans to home movers in April, worth £3.1bn compared with 30,600 loans worth £5bn in April last year.
Lending criteria continued to edge down with a typical home mover putting down a 33 per cent deposit and borrowing 2.63 times their income, compared with 30 per cent and 2.69 in March.
Bob Pannell, head of research of the CML, said: "With the interest rate cycle now at its floor, an increasing proportion of borrowers are taking out fixed rates, including for longer term periods of between five and 10 years.
"With expectations for rates to remain low in the near future, shorter-term fixed-rate deals are less appealing than attractively priced variable rate deals.
"There are tentative signs of house purchase lending stabilising, but we need to see considerably higher transaction levels to underpin house prices."
James Carter, proprietor of London-based IFA Independent James, said: "I have a couple of clients going on the Northern Rock five-year remortgage fixed-rate deal and it has flexible features too and at 4.69 per cent it is at historically low interest rates.
"It is hard to call the bottom of the market and people are starting to buy now."