Tracker sales continue to fall
However the proportion of fixed rate products being processed in Q2 increased and now accounts for 80% of intermediary mortgage business.
For initial product periods, two year terms continue to be the most popular among borrowers, accounting for nearly half (49%) of all fixed rate and tracker mortgage cases, followed by five years at 30%.
However, since Q1, the proportion of two year initial terms has fallen from 53% to 49%, which is the second successive fall in popularity for this length of term.
In comparison, there has been a further rise in borrowers taking out five year terms, increasing for a second time from 24% in Q4 2013 and 28% in Q1 2014, to 30% in Q2.
John Heron, managing director of Paragon Mortgages, said: “It remains no surprise to see that fixed rate mortgages are increasing in popularity.
“With the prospect of impending interest rate rises in addition to continued market fragility in many areas, many borrowers are opting for a less risky and more predictable approach.
“The decrease in two year initial terms reflects the increasing popularity of three and five year options.
“This shows that longer initial terms are increasing in popularity among borrowers, despite two year terms holding the top spot.
“It is encouraging to see further improvement in the numbers of longer-term cases being processed.
“This also reflects the continued more cautious attitude among borrowers, considering the greater stability and predictability provided by longer-term options.”