Shorter-term fixed rate mortgages have increased in popularity, with more homeowners opting for 2-year fixed rate products, according to Paragon’s Financial Adviser Confidence Tracking (FACT) Index.
Some 39% of mortgage business introduced in Q3 was made up of 2-year fixes, up from 37% in Q2.
While 5-year fixes remained the most popular, the proportion of borrowing opting for these fell from 51% in Q2 to 46% this quarter.
John Heron (pictured), director of mortgages at Paragon, said: “5-year fixes started to overtake 2-year deals at the end of 2017 and have been growing in popularity since, driven by historic low rates, tax hikes for owning additional homes and political uncertainty.
“As the UK heads into a general election, it’s interesting to see an increase in the proportion of homeowners looking for shorter to mid-term products as a way to retain stability but allow themselves the opportunity to reassess in two-years’ time, when the Brexit situation and its impact on the economy and the housing market is clearer.”
Unsurprisingly, fixed rate mortgages (89%) were still the overwhelming preference over tracker rate mortgages (9%).
More demand for 5-year fixed rate mortgages led the way (39%) as homeowners continue to favour longer-term stability. However, 35% reported more demand for 2-year fixes.