The quarterly Financial Adviser Confidence Tracker survey – which polled 200 mortgage intermediaries – found the amount of borrowers choosing fixes had reached its highest level since 1996, after increasing steadily from 55% in Q1 2009 and from 41% in Q4 2008.
Fixed rates over two years were the most popular with 40% of borrowers, while 32% chose three year fixes and 24% selected five year fixes. The survey also revealed the proportion of trackers introduced fell from 41% to 26% between Q1 and Q2.
Michael Clarke, public relations manager at Paragon Mortgages, said people opted for fixed rates in record numbers because many trackers had been withdrawn or repriced over the last few months.
Darren Cohen, mortgage consultant at LRG, said customers also chose fixed rates because they offered stability in a difficult economic environment.
He added: “It is likely that the base rate will either be frozen for a while or soon move upwards. Many clients believe now is the best time to be going for the security of a fix and it is hard to argue against that.”
However, Peter O’Donovan, mortgage manager at Bestinvest, said fixed rate deals were not suitable for all customers.
He explained: “Fixed rates may seem like the best option for the majority of borrowers but a tracker might be better for those with flexible budgets who are prepared to gamble that low interest rates will be around for a while.”
“Fixes have also become more expensive recently and trackers have started to look more attractive. It is important to discuss all deals with clients so they go for the mortgage they are able to afford rather than try to second-guess the base rate.”
