Legal & General’s quarterly ‘Mortgage Purchase Index’ shows there has been a big shift towards tracker rate mortgages. In the fourth quarter of 2009, 43% of residential mortgages were trackers, up from 17% in quarter three.
This trend is also reflected in the buy-to-let market as 57% of buy-to-let borrowers chose a tracker compared to 30% the previous quarter.
The Index found that the average two year fixed rate was broadly static, dropping slightly from 4.99%to 4.98% in the last two quarters.
Average three year fixed rates were down from 5.86% to 5.46%; the average five year fixed rate also went down from 6.42% to 5.80%.
Stephen Smith, director of housing at Legal & General, said: “There has been a distinct shift towards tracker rates, most likely because fixed rates are looking relatively expensive and because fears of imminent base rate rises are receding.
“Most commentators are still expecting the base rate to stay low for some time to come, so this is a golden opportunity for people to think about paying off some of their debt.
“The low interest rate environment has lead to a fair bit of innovation in tracker products, what with capped trackers, reverse stepped trackers and lifetime trackers all featuring recently.”
“Average two year fixed rates have remained roughly in line with last quarter, but three and five year fixed rates are down 40 basis points and 62 basis point respectively.
“Furthermore, in the last week or so quite a few lenders have been cutting their fixed rates, so it will be interesting to see how this feeds through to our figures for next quarter. Fixed rates are now being cut because lenders are starting to become more comfortable with the outlook for the sector and because of increased competition.
“The industry seems to have shrugged off the concerns of 2009 and is starting the New Year with fresh optimism.”
Date: 4th, February, 2010
ADVICE TO READERS
While this website is checked for accuracy, we are not liable for any incorrect information included. We recommend that you make enquiries based on your own circumstances and, if necessary, take professional advice before entering into transactions.
Enter your postcode here to find out how much your property is worth, based on Land Registry data.
RSS Feed
Delicious
Digg
reddit
Facebook
StumbleUpon