24 Jan 2018
Five-year fixed rates grow in popularity
Accord Mortgages have announced that they have seen a growth in appetite for five-year fixed rates throughout 2017, most notably amongst those who are remortgaging.
They declared that applications for five-year fixed mortgage rates increased by 30% in December compared to January 2017.
The biggest month-on-month increase in five-year fixed remortgage applications was in November, where applications grew by 10%, reported to be likely provoked by the Bank Rate announcement and subsequent rate rise made that month.
This trend continued into December with two in five remortgage customers applying for a five-year fixed deal.
Accord Mortgages also found that house buyers were also keen to obtain a fixed rate for longer, with the company seeing an 11% uplift in applications for five-year home purchase loans in December compared to January 2017.
National Intermediary Sales Manager at Accord, David Robinson, said: “Due to the competitiveness of five-year deals at the moment borrowers feel they will save more money in the long run by plumping for a longer term fix.
“For instance, there is currently a 0.15% rate difference between a market average two-year fix at both 60% and 65% loan-to-value at a rate of 1.73% and Accord’s 1.88% five-year remortgage deal at the same LTV.
“The changing economic, social and political landscape over the past year may have made borrowers nervous.
“However, our figures show that brokers have navigated clients through the challenges by advising that securing a competitive rate for longer is best for them.
“In the run up to the Bank Rate rise borrowers opted for a five-year fix. Given that’s just a taste of where rates are expected to go, it’s clear borrowers crave the assurance of knowing exactly how much their monthly repayments will be over the next 60 months, which must be a comfort given changeable external factors influencing interest rate flux.”