A recent article in PropertyCommunity.com highlighted the increase in the number of home buyers in the UK who are opting for fixed rate mortgages as a result of rising standard variable rates available from a variety of lenders. Brokers have seen a noticeable spike in the last quarter.
Fixed Rate Mortgages
The mortgage arm of an expanding independent agency has seen a significant increase in the number of one and two year fixed term mortgage applications in the last quarter period, partly as a result of various lenders increasing standard variable rate options, combined with a shift towards special offer fixed term and short term deals away from buy-to-let investors.
This trend is impacting on estate agents london as well as across the UK. Director of Just Mortgages, David Miles believes the number of lenders who have increased the standard variable rate has led to a surge in prospective home owners choosing fixed term mortgages which offer payment protection against short term rate increases. There is also an increase in the selection of three to five year fixed-term deals, although not to the same extent. David anticipates that with some lenders passing on the benefits of their Funding for Lending Scheme participation, this trend is likely to continue.
City based independent mortgage advisers John Charcol which provide support to estate agents London and nationwide, have also noticed the rise in demand for fixed rate mortgages.
Spokesperson for John Charcol, Ray Boulger explained John Charcol has seen an increase in clients choosing fxed rate mortages to 69% in October, with 5% opting for a three-year fix and the remaining 64% equally split between two and five year fixes.
Increases In Mortgage Lending Anticipated In 2013
Mr Boulger says that he anticipates an increase in the level of gross mortgage lending in 2013 to an estimated £155 billion. He believes borrowers are reluctant to get themselves locked into lengthy Early Repayment Charges mortgages and with tracker mortgages and discount rates mortgages now more expensive than fixed-rate alternatives, the choice is obvious.
Mr Boulger thinks that it can prove a good strategy for clients requiring a high LTV so long as they select a lender with the option of reverting to the cheaper SVRs. The majority of lenders direct their borrowers to the same rate despite the LTV. He sees the hotting up of competition at high LTVs with lenders offering less than 3% five-year fixed rate mortgages of as much as 60% LTV. The idea that only those with a 40% deposit are being helped by the FLS does not stand up against the facts.
According to John Charcol, the most attractive five year fixed rates at higher LTVs are Accord’s 75%, 3.29% with a fee of £995; 80% from Metro Bank at 3.79% with a fee of £999; Nationwide’s 85% at 4.49% with a fee from £999; and Royal Bank of Scotland/NatWest’s 90% at 4.79% with no fee but limited to first time buyers.
AUTHOR BIO : Diyana Lobo is a freelance writer who contributes regularly to numerous mainstream press and property websites and blogs. She has written extensively about commercial property across the UK, with a specific emphasis on office space and estate agents London. Jules particularly enjoys writing about conversion and restoration projects on historic buildings and the development of new properties in the City of London where excavations uncover archaeological remains.