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Five-year fixes rising in popularity for remortgagors – Iress

  • 04/02/2021
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Five-year fixes rising in popularity for remortgagors – Iress
Remortgaging borrowers are opting for five-year fixed deals amid a low rate environment and continued economic uncertainty, analysis from Iress and price comparison site Koodoo has found.


According to data collated from visitors to Koodoo, five-year fixed rates accounted for 28.5 per cent of all searches in January following a steady rise from 25.6 per cent in October.  

Five-year fixed mortgages also recorded the fastest growth since October compared to other fixed and variable mortgage terms between October 2020 and January 2021. 

Still accounting for the majority of remortgage searches, two-year fixes saw the sharpest drop of all fixed terms from 48 per cent to 43.7 per cent over the same period. 

The data indicated there was a general increase in appetite for longer term mortgages as searches for three-year fixes rose from 10.5 per cent to 11.9 per cent, ten-year fixes rose from 5.1 per cent to 5.6 per cent and seven-year fixes remained flat at 2.9 per cent. 


High equity needs 

Remortgage products for borrowers requiring at 60 per cent loan to value (LTV) deals were the most popular, the analysis showed. Searches within this tier for two-year fixed mortgages accounted for 19 per cent of searches and five-year fixes made up 15 per cent of searches. 

Searches for 60 per cent LTV mortgages were significantly higher than other lending tiers, with the 70-75 per cent LTV deals being the second most favoured taking up 4.7 per cent of two-year fixed searches and 2.8 per cent of five-year fixes. 


Purchaser apprehension 

Those buying a home still primarily opted for two-year fixes which made up 39 per cent of searches in January, slightly down from 38.3 per cent in October. 

Longer term mortgages proved to be less popular with purchasers as five-year fixes saw a nominal 0.2 per cent rise to 30.3 per cent of searches. Seven and ten-year fixes both rose in demand by 0.1 per cent to 2.6 per cent and 6.2 per cent respectively. 


High LTV demand 

The return of high LTV mortgages sparked a 3.2 per cent increase in searches for 85-90 per cent LTV deals to account for 31.4 per cent of clicks, while 90-95 per cent LTV products rose 2.3 per cent to 14.2 per cent. 

Searches for 95 per cent LTV mortgages stayed flat at 3.6 per cent and all mortgages at lending tiers of 75-80 per cent LTV reported quarterly declines. 

Dave Miller, general executive manager of Iress, said: “We’re clearly seeing a response to continued uncertainty in the market, with consumers keen to lock in rates for a longer period. We’re also seeing that lenders are beginning to show signs of willingness to lend at higher LTVs.  

It’s our intention that lenders be able to use this data to inform their lending strategies to navigate the current environment and facilitate the eventual return to improved lending conditions.”  

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