Fixed-rates mortgages top June poll

| August 15, 2007 | 0 Comments

Fixed-rate mortgages are proving more popular than ever, with a record numbers of homebuyers opting for this method of borrowing in June.

According to figures published by the Council of Mortgage Lenders, 90% of first-time buyers took out fixed-rate loans in June of this year compared with 83% in June of 2006.

Of house movers in general, 76% took out fixed-rate agreements during the month, compared with 63% a year earlier.

The Bank of England’s five increases in the base rate over the past year has left many borrowers nervous of further rate rises.

This combined with the pressure on household finances caused by the rise in borrowing costs, has heightened the appeal of fixed-rate mortgages, which allow homeowners to plan their budgets well into the future.

The Royal Institution of Chartered Surveyors’ (RICS) June survey shows affordability constraints increasing, with the typical first-time homebuyer borrowing a record 3.37 times income. In June 2006, the figures stood at 3.22 times income.

According to the RICS, potential first-time buyers are opting to remain in the rented sector until interest rates peak.

The number of loans taken out by first-time buyers fell to 35,600 in June, putting the figure at its lowest since June 2004, and down from 39,800 in June 2006.

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