CML reveals increasing popularity of fixed rate mortgages
The CML’s regulated mortgage survey (RMS) revealed that in April fixed rate mortgages accounted for 71% of all loans for house purchase and remortgage. This figure is 2% higher than in March, and 17% more than in April 2005. The increasing popularity of fixed rate products reflects attractive deals being offered by lenders, coupled with consumers wanting to lock into low-rate long-term deals.
Our survey also found that loans for house purchase accounted for 46% of all loans in April – up from 43% in March, but slightly lower than the 45% achieved in the same month last year. Remortgaging accounted for 36% of all loans, and this is slightly lower than in March, but down by 5% on April 2005.
Loans to first-time buyers totalled 30,700 in April and our survey reveals that the average first-time buyer loan size is now £106,400, up from £103,839 in March and significantly higher than the £94,995 in April last year. In April, first-time buyers borrowed 3.21 times their income to get a mortgage, up from 3.15 times in the previous month. However, mortgage interest payments as a proportion of income have actually fallen to 16.2%, from a peak of 17% in June 2005.
CML director general Michael Coogan said: “Today’s data confirms that the market is in good shape. The strong take-up of fixed-rate deals is encouraging because they give consumers confidence in their mortgage payments and allow them to plan ahead financially.
“It is also interesting to see that while both first-time buyers and movers are borrowing a greater multiple of their income to get a mortgage, their payments as a proportion of income are lower than in the same period last year. This is potentially due to the higher take-up of attractive fixed-rate products over the past year.”