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Consumer rush to fixed-rate mortgages
20 June 2008 13:53
The number of consumers taking out fixed-rate mortgages is increasing, despite the rising costs of these products.
Legal & General, one of the UK's leading financial service companies, analysed trends from 24,000 mortgage applications made in the last quarter (2008) and found that 75 per cent of all mortgages are now on fixed rates – up 18 per cent from the previous quarter (2008).
Stephen Smith, director of housing at Legal & General, was surprised by consumer appetite for these mortgages despite the increase in rates.
Mr Smith believed that this preference to chose certainty over value shows how risk averse the UK mortgage population is.
The report also revealed that interest rates have risen for two-year fixed rate mortgages from an average of 5.87 per cent to 6.51 per cent, whilst rates on a five-year fixed rate grew from 5.82 per cent to 6.34 per cent.
These figures are announced as Nationwide, the UK's second biggest lender, became the latest building society to further raise the price of its loans - increasing the cost of its mortgages by up to 0.5 points.
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