Cautious North West homeowners opt for fixed rate security
Despite the threat of a sudden interest rate rise significantly reduced, North West mortgage applicants are playing it safe and preferring a fixed rate mortgage to a variable tracker.
91 per cent of applicants in the North West of England applied for a fixed rate mortgage in July, while 76 per cent applied for a fixed rate remortgage.
Such precaution however appears to be limited to this region.
According to the Mortgage Advice Bureau, fixed rate mortgage applications have continued to fall since their peak in March 2011, and fell by a further 10 per cent from June to July.
London saw the biggest drop in fixed rate mortgage applications with the majority now favouring variable rate products. In the previous month, a fixed rate mortgage was still the overall mortgage of choice with 59 per cent of all London applicants opting for the stability such a product offers.
However, with news that the Bank of England base rate looks set to remain at the historically low rate of 0.5 per cent for the remainder of 2011, and rumours it could drop even further to 0.25 per cent, the majority of applications in July were for variable rate products (55 per cent).
But Richard Tugwell, Head of Intermediary Sales at Northern Rock, believes it shouldn’t be a case of fixed rate or variable rate.
“Rather than a straight choice between a cheap tracker now or a fixed rate to guarantee future repayments when interest rates do rise, a tracker that allows clients to move to a fixed rate in future without penalty makes brokers lives easier and adds value to the advice they are giving.”¹
Content correct at time of publication