Fixed rate mortgages remain the most popular option but trackers are catching up

27th April 2015


Brokers are writing more mortgage business with longer-term initial rates new research has revealed.

The results from the specialist lender, Paragon Mortgages’s quarterly intermediary tracking survey for the first three months of 2015, showed 30% of cases were for terms of five years or more – for trackers and fixed rates deals, marking a 26% rise on the previous quarter.

At the same time, there was a reduction in two and three year terms, dropping from 71% to 66%.

Intermediaries have reported a decline in popularity of tracker rate products since mid-2012. Survey results showed a continuous fall from the third quarter of 2012 to the second quarter last year.

However, this trend appears to be shifting, with tracker products accounting for 18% of cases in the first quarter this year versus 15% of cases between October and end of December last year.

Despite the modest improvement in the sale of tracker products, fixed rates continue to be the most popular with intermediaries recommending a fixed rate product in four out of every five sales according to Paragon.

Generally, intermediaries are also feeling more positive about future levels of mortgage business, with on average those surveyed expecting a 6% increase in case volumes in the second quarter.

John Heron, Paragon managing director, said: “The gap between fixed rate and tracker rate sales widened significantly from the start of 2012, and it is not since 2010 that we have seen tracker and fixed rates selling in equal numbers. Whilst concerns over imminent increases in interest rates may have abated, it is clear that landlords are continuing to take a cautious approach by selecting fixed rates in much larger numbers and over longer periods.”

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