Fixed-rate mortgage interest 'will drop'
New research has found that fixed-rate mortgages were more popular than they have been for 18 months in June, but one firm believes they have hit their peak.
Borrowers' interest in picking up fixed-rate mortgages has hit its peak, according to one firm, and the number of customers looking to find such a deal will drop in the future.Independent mortgage adviser John Charcol reckons that June, which saw 83.1 per cent of its clients choose a fixed-rate deal, taking the four-month average to 81.2 per cent, will be the last month to see a rise in take up of the loans.
June saw the highest level of customer interest in fixed-rate mortgages for the past 18 months and the firm believes such deals will remain the most popular among borrowers, although tracker deals will take away some attraction.
Despite security being a number one concern among borrowers, meaning that fixed-rate mortgages will still retain some interest, especially among those on a high loan-to-value deal, the Bank of England's decision to keep the base rate constant over the past few months has led to more tracker deals being taken up.
According to Ray Boulger, senior technical manager for John Charcol: "We are recommending trackers to more clients this month, with the focus on low or no early repayment charges as well as the obvious requirements of a good rate and fee combination and possibly an offset facility.
"The reason the size of the early repayment charges is important, unless the mortgage offers a drop-lock option, is that many clients will want to consider switching to a fix when the time is right for them."
Recent research by financial advice website Moneyfacts showed that there are no mortgages available today which are long-term and fixed-rate.
It found that there were eight mortgage lenders offering 25-year fixed-rate deals in January 2008, which lowered to three in the same month this year, while today no banks are offering the loans.
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