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Flexible mortgage demand grows

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  • 01/12/2000
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The latest research from First Active has confirmed that the demand for flexible and current account...

The latest research from First Active has confirmed that the demand for flexible and current account mortgages is growing.

According to the First Active Flexible Mortgage Index, 43% of borrowers with traditional products are thinking about remortgaging to a more flexible product, while 30% of those with a flexible product are considering moving to a current account mortgage.

Natasha Plackett, public relations manager at First Active, said: “With the proliferation of flexible products on the market and with consumers becoming more aware, many borrowers using flexible mortgages are considering taking the next step and remortgaging onto a current account mortgage as they offer even more flexibility.”

The index is now predicting that within five years, flexible mortgages will account for 55% of all lending.

Borrowers are also making the most of the product’s flexibility, according to First Active. Over a third are making overpayments and nearly three- quarters are intent on repaying their loan early.

Of those borrowers who had made overpayments, 70% made regular overpayments while a quarter made lump sum payments. The reasons for overpaying were usually a desire to repay the loan as soon as possible, but the need to make interest savings was also a significant factor.

The research also indicated that more and borrowers are looking to repay their loan over 25 years. “Traditional mortgages have usually been paid over a 25-year term, but just 2% wanted to spread their mortgage over this long a period,” said Plackett.

She added: “This shows that people want to get rid of their mortgage and are doing so with overpayments.”

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