Borrowers opting for fixed rates

Sarah Davidson

October 28, 2015

Mortgage Advice Bureau research claims this is the first time this has happened since the Bank of England base rate was lowered to 0.5% in March 2009.

The data suggests borrowers are increasingly motivated to lock into fixed rates while mortgage pricing remains low. In comparison, just 91% of homebuyers fixed between February and April this year, and April 2014 remains the only other time where 96% of homebuyers have done so.

Some 92% of remortgage customers also fixed their rates in both August and September.

This is the highest proportion recorded since June 2014 when 93% of remortgaging homeowners opted to fix. The intervening period saw fixed rate popularity for remortgages fall as low as 85% in December 2014.

The average 2-year fixed rate rose from 2.68% in August to 2.72% in September, marking the first rise after 12 months of consecutive record lows. Meanwhile 5-year fixed rates also rose for the first time since August 2014, while 2-year trackers rose for the second successive month.

In contrast, the average 3-year fixed rate reached a new low of 3.10% in September, down from 3.11% in August and 3.71% a year ago.

Brian Murphy, head of lending at Mortgage Advice Bureau, said: “Sooner or later, the predictions of an interest rate rise are going to become a reality and some lenders have started to act ahead of this to ensure they are not short-changed.

“Borrowers should not be too alarmed by September’s jump in pricing, as there was only a slight increase and 3-year fixed rates continued to fall. All the same, it is a timely wake-up call that these rates are not here to stay forever.”

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