According to the latest six-monthly Business Outlook Survey from Family Building Society, borrowers are opting for 2-year fixed mortgages rather than committing themselves to fixing a rate for 5-years.
Over three quarters of mortgage intermediaries and financial advisers said they had noticed an increase in applications for 2-year fixed rates as opposed to those looking to fix their mortgage for f5-years with over half of those applications opting for 2-years.
Alistair Nimmo, Family Building Society director of marketing, said: “With three Bank of England Bank Rate reductions predicted this year, it is not surprising that borrowers do not want to commit themselves to a longer-term mortgage.
“Add in the current economic and worldwide political uncertainty which may cause further downward pressure on Bank Rate, fixing outgoings for a short period makes sense while waiting for possible cheaper rates in the short term.”
The survey also found young people are still keen to get on to the housing ladder with three quarters of brokers noticing there is still a strong desire to own a home while two thirds said there was no lack of first-time buyers.
However, almost two thirds of intermediaries also noticed an increase in enquiries where family members wanted to support children and grandchildren in meeting mortgage and moving costs.
Nimmo continued: “While it remains as difficult as ever for first time buyers to get onto the property ladder and not helped by the recent reintroduction of the lower Stamp Duty thresholds, the survey’s findings on families’ continual desire to help family members into a home of their own confirms our decision to have recently introduced a fee free 90% loan-to-value (LTV) Joint Borrower Sole Proprietor product.”
