It said 89% of broker-introduced mortgages in the first quarter of 2017 were fixed rates – a record figure. Meanwhile, trackers have declined to their lowest ever level (10%).
The results come from Paragon’s latest Financial Advisers Confidence Tracking (FACT) Index report, involving interviews with 200 mortgage intermediaries. They continue a long-term upward trend for fixed products, which has been particularly marked since 2010, when trackers and fixed rates were equally popular.
The most notable shift in Q1 was the increase in popularity of five-year fixes, up 3% to 34% of all mortgages. Two-year fixed rates are still the most popular product, despite declining to 48% from 53% the previous quarter.
Paragon added that buy-to-let lending stabilised in the first quarter of 2017, following a period of disruption last year. Buy to let accounted for 18% of all mortgages handled, whilst remortgaging remained the most common type of borrowing.
Within buy-to-let lending, remortgaging accounted for 47% of all business, maintaining a steep upward trend since Q3 2013, whilst lending to first time landlords eased to 15%, continuing a long-term decline from 27% in the same period.
John Heron (pictured), managing director of Paragon Mortgages, said: “It’s clear to see that the benefit of certainty at such low rates is continuing to drive up the popularity of fixed-rate mortgages – particularly five-year fixed terms, which gained further ground in Q1 2017.
“The FACT Index gives Paragon a uniquely long-term view, and the ability to measure changing characteristics of the market, particularly in buy to let. The widening in favour of remortgages over purchase transactions suggests that supply to the PRS [private rented sector] may be coming under pressure, which in turn may lead to higher rents.”
Brokers have predicted that fixed rates will experience ‘a seismic shift’ this year as lenders increase prices.