Anxious homeowners opt for fixed-rate borrowing
Despite the likelihood of interest rate reductions during the coming year, anxious homeowners are far more likely to opt for a fixed-rate mortgage product than a tracker.
Research from Abbey Mortgages has found that almost four times as many borrowers (10.3 million) would take a fixed-rate option rather than a tracker (2.8 million) if they had to renew their mortgages now.
The two year fix-rate deal remains the most popular mortgage, with 8% (2.7 million people) saying they would choose this option.
Seven per cent of homeowners (2.4 million people) would opt for a 10 year fixed-rate and 6% (1.8 million) would fix for 15 years.
The research shows that demand for long-term fixed rate products continues to increase, as both 10 and 15-year fixes are now almost as popular as two year deals.
The data could also indicate that homeowners are becoming reluctant to engage with the effort and cost of remortgaging after only two years.
Only four per cent of mortgagers would choose their lender’s standard variable rate.
However, 58% of borrowers surveyed were uncertain which type of mortgage they would choose.
According to Abbey Mortgages spokesperson Nici Audhlam-Gardiner: “The research suggests that continued talk of economic gloom has had two effects on borrowers: they are either determined to take the more stable option or are confused about the best mortgage option to take.”