Fixed-rate deals ‘becoming more popular’

Fixed-rate mortgages are rising in popularity, a newly-released survey has suggested.

A report published by Legal & General as part of the Mortgage Purchase Index series has found that in the first quarter of 2009, 72 per cent of its residential borrowers opted to take out a fixed product.

This has risen from the level of 65 per cent that was seen during the final quarter of last year, the firm noted.

Director of housing Stephen Smith stated that the popularity of fixed home loans has “swung wildly” as homeowners seek to handle debt management.

He explained: “Fixed rates are very much back in favour, partly because lenders have been increasing the margins on their new tracker mortgages.”

The average cost of a three-year deal was 5.41 per cent in the first quarter of 2009, while a typical two-year mortgage had a rate of 4.78 per cent, the report showed.

It comes after Steve Turner of the Home Builders Federation called upon the government to boost the flow of mortgages in the UK.

By Jamie Price