Borrowers build a fixed rate dam against the April showers

In April, borrowers responded to headlines of falling house prices and rising costs of living, by seeking security in fixed rates and exercising caution about investing in buy-to-lets. Charcol's Mortgage Monitor measures mortgage activity at application stage, giving the most accurate reflection of mortgage application trends.

Fixed vs. variable?

A record 78% of mortgages arranged on a fixed rate in April, up from 64% of borrowers in April. "This is very high on trend" comments Katie Tucker, Technical Manager for Charcol. "These peaks normally occur when Bank rate rises are expected, but as Bank rate is widely expected to fall over the next year most of the high take-up was because fixed rates were a quarter to a half a percent cheaper than trackers. Nonetheless, this second consecutive jump may also imply that borrowers are nervous about the strength of the economy and fear that rates will soar as they did in the early 90s, but such a hike is extremely unlikely; the economy as a whole is strong, economic growth is a priority for the MPC, and unlike during the early nineties, when bank rate policy was straight-jacketed by the Exchange Rate Mechanism, we are unlikely to fall into such a recession."