UK mortgage market evolving as more people look for new types of deals
The UK's mortgage market is having to evolve and adapt in order to stay in line with what people are looking for from their house purchase loans, a new study has shown. And it would appear that the most common change experienced is for longer deals to become more available.
According to a study by LMS, people no longer want short term deals and variable rates from their mortgage products, and are instead looking to fix their interest rates for longer periods of time. At present, this means a growing number of people looking to secure five-year fixed term deals.
The reason for this is that the continued low interest rate in the UK provides an opportunity to find financial security for owners. Because the base rate can only rise, there's really nothing that owners can lose from securing low interest rates for a longer period of time than they might have in the past.
This is shown in the fact that only two per cent of respondents to the LMS survey said they expect to see interest rates fall across the UK over the course of the next 12 months. This was compared to the huge majority of 98 per cent who said they expect to see rates either climb or stay the same across this period.
In total, as many as 37 per cent of homeowners are now fixing their terms for five years, according to the survey. This is the highest proportion recorded since the study began, and it marks a massive rise from the seven per cent previously recorded.
This shows that the market continues to adapt and evolve in order to meet conditions, and those who own homes, or who are getting onto the ladder, are increasingly savvy about what economic positions mean for them and their house payments.
"Borrowers are taking shelter from future rate rises and preparing for potentially turbulent times to come. The way people borrow is changing, there is a significant decline in interest-only and variable rate deals, and fixing for longer appears to be the top priority. It’s a flight to financial security," said Andy Knee, LMS' chief executive.
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07-September-17General Lettings News