Short term fixed rate mortgages increase in popularity
Shorter-term fixed-rate mortgages have increased in popularity with more homeowners opting for two-year fixes according to Paragon’s latest research.
Two-year fixed-rate mortgages accounted for 39% of mortgage business introduced in Q3 2019, up from 37% recorded in Q2. While fixed periods of five years or more remain the most popular, the proportion of mortgage customers opting for a long-term fix fell from 51% in Q2 to 46% this time around.
Fixed-rate mortgages (89%) were still the overwhelming preference over tracker rate mortgages (9%). But with an election looming and lack of clarity around the Brexit situation, homeowners are perhaps looking to shorter-term fixes to gain greater flexibility to reassess when things settle down.
John Heron, Director of Mortgages at Paragon, said: “Five-year fixes started to overtake two-year deals at the end of 2017 and have been growing in popularity since, driven by historic low rates, tax hikes for owning additional homes and political uncertainty.
Source: Paragon’s research from 201 mortgage intermediary firms
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Halifax for Intermediaries is offering a market-leading sub-1% tracker rate mortgage.
The 0.98% mortgage tracks the Bank of England base rate of 0.75% with a margin of 0.23%. It is available for property purchases, has a £999 arrangement fee and applicants will require a 40% deposit to qualify.
After the fixed-rate period, the mortgage reverts to the lenders 4.24% standard variable rate and the APRC is 3.7%. The maximum loan is £1 million.
If you are looking for a two-year fix, Halifax's rate is 0.07 more expensive than the tracker.
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