Homeowners are seeking the security of fixed over cheaper payments as a further defence against economic uncertainty, said Brian Murphy, head of lending at Mortgage Advice Bureau (MAB). However, the Centre for Economics and Business Research (CEBR) predicted earlier this week we may not see an interest rate rise until 2016.
Despite the Christmas drop off, MAB figures suggest the average two-year fixed rate stood at 4.24% in December, rising to 4.52% for three-years and 4.58% for a five-year term, against 3.39% for the average two-year tracker.
“Average two, there and five-year fixed rates are all lower than 12 months ago with average rates falling by 0.13%, 0.49% and 0.71% respectively. Average trackers are down by a smaller margin from 3.46% in December 2010,” said Murphy.
Nearly two-thirds, or 62% of remortgage clients also chose to fix their mortgage rate.
MAB revealed its average loan size on applications in December was £137,230 against £140,448 in November and 4.62% higher than the 2010 average of £126,888.
The average MAB applicant’s Loan to Value (LTV) in December was 69.8% with the average deposit standing at £59,375, 12% higher than last year. Its average applicant age hit its highest since the index launched at 39.
However, as lenders continue to re-enter the higher LTV market, first-time buyer access will continue to improve, said Murphy.