Figures released by LMS found that there was a rise in customers taking out five-year fixed rate mortgages, as the popularity in two-year fixed-rate deals saw a decline during September.
A poll run by Mortgage Solutions supported the LMS findings as 63% of brokers said they had noticed a rise in clients taking out longer fixed terms when they were remortgaging, while 37% said they had not.
Senior mortgage and protection consultant at Start Mortgages, Emma Garrett, said she had seen a rise in clients taking out longer-term fixed rates for their remortgages, notably in the summer period, and credited Brexit as the driving force behind the trend.
“A lot of my clients are opting for a five-year fix because when Article 50 is triggered, they do not want to come out of their deal not knowing what the market is going to look like,” said Garrett.
She added many borrowers said they wanted the security of being in a longer fixed-term deal while Brexit negotiations took place just in case the market suffered as a result.
“From my point of view, the housing market looks very positive and borrowers will soon see this too,” said Garrett. “Six months ago, many of them would dismiss taking out a five-year fixed rate because it would cost them more than a standard two-year fix. But now clients are not willing to take a gamble and want the assurance that they will be okay.”
However, this sentiment wasn’t shared by all brokers as Chris Hall, mortgage and protection adviser at First Xtra Financial Services, said he had not seen borrowers wanting to fix for longer in the wake of the referendum.
“A lot of borrowers still think interest rates will stay low over the next two years, so they happy to take out a shorter fix now and then after that they may consider a longer fixed-term deal,” said Hall
Garrett said she was confident the recent imbalance in choice of fixed-rate deals would eventually level out, as what the LMS figures highlighted was merely a knee-jerk reaction from borrowers in the face of something new to everyone.
She said once Brexit becomes a reality, borrowers will soon regain their confidence in the market.
“Once article 50 is triggered and customers realise nothing has changed because of it, we will see a return in customers opting for in shorter fixed rate deals. But until then people will keep thinking: what if?”