Survey sheds new light on mortgages

Among first-time buyers, the proportion preferring a face-to-face interview to arrange their mortgage rises to 83%.

Commenting on the findings, the CML's deputy director general, Peter Williams, said: "With most people still preferring a face-to-face interview to set up their loan, it is important that the regulation of mortgages by the Financial Services Authority ensures that consumers clearly understand the difference between advice and information.”

The internet may be useful for finding out about mortgages and comparing costs and features, but only one per cent of borrowers made their first approach to a lender using a computer, the survey found. From a weighted base of 1,067 mortgage holders, only nine had used a computer to approach a lender, with another two using digital television.

The survey was based on interviews with 3,206 householders carried out by MORI Financial Services between October and December last year. Other findings emerging from it include:

• For the first time in more than a decade, repayment mortgages now comprise the majority of the stock of outstanding mortgages.

• A growing number of borrowers are changing their lender, renegotiating the terms of their mortgage or increasing the amount borrowed without buying a new property.

• The number of borrowers with a flexible mortgage - allowing them to vary their mortgage payments - has grown to 20%. But only 4% of these borrowers have used this type of loan to take a payment holiday.

• More than 80% of people have no debts or find paying them 'okay'; 5% sometimes fall behind with their debts and 3% worry about them most of the time.

Williams said: “It is encouraging that the overwhelming majority of borrowers are managing their mortgage debts very well. That has helped the industry to reduce arrears and possessions to the lowest levels we have seen for 20 years. But the uncertain economic outlook makes it even more important for borrowers to think about how they would manage if interest rates rise or their income falls. Homebuyers are also failing to claim £1 billion a year in tax credits, which would help them cope better with their debts."