Moneyfacts: Consumers are looking for stability with fixed interest rates


An estimated 80% of those looking for a mortgage in August were looking for a fixed income product, according to the latest risk, availability, and demand data from Moneyfact’s Residential Mortgage Analyzer.

According to Moneyfacts, this will suggest that borrowers may prefer fixed rate mortgages in times of economic uncertainty, possibly due to budgetary ability and protection from future interest rate volatility.

The data also found that those whose 2016 5-year fixed-rate mortgages are now maturing and are now looking for a similar product will find at 2.63%, the average total fixed rate is 0.41% lower than at securing their existing deal.

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Moneyfacts: 2- and 5-year rates fall for the third month in a row

Likewise, the average rate on 2-year fixed-rate mortgages is 2.38%, 0.08% below the corresponding rate in September 2019, so even those who take out a 2-year fixed rate may find a more competitive offer.

The availability of 10-year fixed-rate mortgages remained relatively stable with 128 transactions. The selection was 31 fewer than in September 2019, but compared to 2016 there was one more option than five years ago.

Darren Cook, Head of Analyzer Products at Moneyfacts, said, “The risk, availability and demand data from Moneyfacts Residential Mortgage Analyzer shows that mortgage customers seem to appreciate the impact of the Bank of England base rate and future inflation rates on interest rates since a whole and what type of mortgage they want to apply for.

“Our latest study shows that more than eight in ten (81.04%) consumers looking for a new mortgage in August were looking for a fixed-rate mortgage availability.

“As a result, less than 20% of consumers are looking for adjustable rate mortgages, which could suggest that the vast majority of potential new mortgage owners are risk averse in the current economic climate.

“Currently, just under nine out of ten (87%) of all fixed-rate mortgages available on the market are either 2- or 5-year initial rate contracts that 36.18% of consumers after a 2-year fixed-rate mortgage and 28.40% after looking for a 5 year contract.

“Long-term financial stability could also be a priority for consumers as the economy develops, as 8.93% of demand is taken up by those looking for a 10-year fixed-rate mortgage.”

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