Print

Three is the magic number - for fixed rate mortgages

Jude Buttle

The demand from homeowners for three-year fixed rate mortgage deals has tripled during the last six months, according to new research conducted by Abbey for Intermediaries.

The study found that 21% of homeowners would prefer a three-year fixed deal, compared to 9% who would select a two-year fixed rate deal and 8% who would fix for five years.

The decline in popularity of five-year deals from a high of 22% last month indicates that borrowers feel more optimistic about mortgages remaining affordable over the short term, possibly fuelled by rates recently being reduced by a number of lenders.

The news is likely to be of extreme interest to intermediaries that have struggled to place mortgage products with clients.

Ricky Okey, managing director of Abbey for Intermediaries said: "The volatility of the market is such that these rates may not be around for long and intermediaries have an opportunity to encourage clients whose mortgage deals are soon to expire to at least start their search for a new rate now."

Phil Cliff, director of Abbey Mortgages, added:  "We are amongst those lenders who have recently reduced their rates and this seems to have inspired the confidence of borrowers.

"Deals such as our three year fix at 5.69 per cent are proving very popular as mortgagors opt for the middle ground between the short two-year fixes and committing to a five-year deal."

The overall demand for fixed rate mortgage deals has also increased, with more than half claiming that they would choose them over another mortgage product.