Increasing numbers of mortgage borrowers in the UK are switching their home loans to fixed rates.
That’s the view of various mortgage experts who have seen a rise in demand for fixed rate loans over
recent weeks as the Bank of England look increasingly likely to raise interest rates from their current
level of 0.5 per cent.
Borrowers are ‘running for cover’
In order the combat higher than expected inflation figures, the Bank of England is widely predicted
to increase interest rates over the next few months. Interest rates have been at their current record
low of 0.5 per cent since March 2009.
Brian Murphy, of mortgage brokers Mortgage Advice Bureau, said: “The stand-out trend in the
mortgage market at present is the increase in the number of rate-wary borrowers remortgaging
onto fixed rates.
“People know that rate rises are coming and they are locking in now before fixed rates move higher.
Essentially, borrowers are running for cover.
“Consumer confidence is in tatters and until prospective buyers feel safer financially the mortgage
and property market will remain stuck in a rut.”
As many as four in five borrowers chose a fixed rate mortgage deal in February, reports the Daily
Telegraph.
Property and mortgage market still struggling in early 2011
The rise in demand for fixed rates comes as figures from the Council of Mortgage Lenders (CML)
show mortgage lending stalled in February at £9.5 billion, almost the same as January’s lending
figure of £9.48 billion.
Bob Pannell, chief economist at the CML, said: “There is little in the latest batch of market data
that would cause us to revise our market forecasts for 2011, and nothing that alters our underlying
view that this is going to be a challenging year for households and the housing market. The housing
market remains stuck in a rut.”
