Borrowers in a fix over mortgage deals

Almost four times as many homeowners would opt for a fixed rate mortgage as a tracker if they had to renew their mortgage tomorrow, according to research from Abbey Mortgages.

The monthly Abbey Remortgage Tracker found that 10.3 million people would fix and just 2.8 million would opt for a tracker mortgage this month.

2.4 million people (7 per cent of homeowners) would opt to fix for ten years and 1.8 million (6 per cent) would fix for a massive fifteen years if they were remortgaging tomorrow. The two-year fix remains the most popular mortgage with eight per cent – or 2.7 million people – saying they would choose this option.

Demand for long-term fixes continues to increase – and the research shows that both 10 and 15-year fixes are now almost as popular as two-year fixed rates (at 7 and 6 per cent compared to 8 per cent respectively.)

However, worryingly it seems the majority of borrowers would be in a quandary over which type of deal to opt for – 58 per cent claim they would be unsure of which deal to choose. Four per cent of mortgagers – over 1.3 million people – would choose their lender’s standard variable rate.

Nici Audhlam-Gardiner, Head of Abbey Mortgages said: “The research suggests that continued talk of economic gloom has had two effects on borrowers – they are either determined to take the more stable option or are confused about the best mortgage option to take.

“There is continued interest in longer terms fixed rate mortgages, reflecting customers’ confusion in what will happen in the markets short term, and also some fatigue with the two year remortgage effort and costs. Borrowers need to be sure however that the deal they take out is right for them and that they understand the different types of mortgages available before signing up to anything.”