Majority of mortgages now fixed-rate

The number of fixed-rate mortgages in the lending market has increased over the last 12 months, new research has revealed.

Moneyfacts.co.uk has found that these homeowner loans now account for 69 per cent of the total market, up from 51 per cent in December 2007.

And despite the two-year swap rate falling 2.61 per cent since October 1st, the average two year fixed-rate mortgage has fallen by only 0.71 per cent.

Moneyfacts.co.uk analyst Michelle Slade explained that the withdrawal of many cheaper tracker mortgages has reduced the options available to borrowers.

“It is evident that lenders are continuing to increase their margins, despite a fall in the cost of funding,” she remarked, adding that many borrowers seem to prefer fixed-rate mortgages as they enable them to keep track of their monthly outgoings.

Such a factor could make them appeal to homeowners looking to become debt free by managing their finances more effectively.

Customers that are on a tracker mortgage are likely to save a total of £9 billion throughout 2009 due to the recent base rate cuts, uSwitch.com stated recently.

By Tom Musk