Increasing numbers of people are taking out fixed-rate loans despite the price of application fees rising by over 60% since September 2006.
A total of 323 fixed-mortgage deals now charge application fees of over £750, according to MoneyExpert.com, compared to only 22 eighteen months ago. The average fee now stands at £860.25.
However, 59% of borrowers took out fixed-rate products in April, as they look for financial security on their mortgage payments. This marks a 5% increase on 54% in March, according to the CML.
Gross lending in April increased 8%, to £26.1bn, from March, and loans for house purchases were also up 9% in volume (to 50,700) and 10% in value (to £7.7bn).
First time buyers also received more loans, with an increase of 4% to 18,500, while the 32,000 loans that were given to home movers signified a 13% rise.
Despite these slight increases however, the credit squeeze has meant that lending volumes are still significantly lower than last year. Loans to first time buyers are 36% lower while loans to home movers are down 38% and there has been a 24% drop in gross lending.
Michael Coogan, director general of the Council of Mortgage Lenders, says: “The squeeze on mortgage funding has led many lenders to tighten their lending criteria. While tighter criteria make it more difficult for some borrowers to obtain a mortgage, they also reduce risk in a slower housing market.
“There has been a resurgence of fixed-rate lending as borrowers are seeking certainty. This trend is likely to continue as the anticipation of future Bank base rate cuts has diminished.”
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