Demand for fixed rate mortgages is on the up despite a surprise interest rate reduction this month and the prospect of further cuts on the horizon.
Abbey’s remortgage index shows the popularity of three-year deals has soared in recent months as borrowers hope to budget their way through the economic downturn.
According to Abbey, 56% of remortgagers would opt for a fixed rate deal when their current fixed term comes to an end, up from just 47% in July this year.
Tracker demand has also waned, with ten percent of borrowers saying they would take out a tracker deal in September, down from 11% in August.
Abbey says three-year deals are proving particularly popular, with 23% of homeowners saying they would take this kind of deal, compared with just 8% in July.
Meanwhile, five-year mortgage deals are less favoured, with just 8% of respondents opting for a longer-deal, compared with 22% in July.
Nici Auldhlam Gardiner, director of mortgages at Abbey, comments: "The research suggests that borrowers are not willing to gamble on a rate cut, instead they are more likely to opt for a medium term fix which will provide them with some financial security in these uncertain economic times.”
Popularity of longer fixed rates deals of between 10 and 25 years remained broadly stable.
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