October has seen a decline of fixed rate mortgages, with over a quarter (26.3 per cent) of borrowers going for them.
Not since November 2008 has the smallest market share belonged to fixed rate products according to the John Charcol Index. The current situation was unimaginable four months ago, when fixed rate products commanded 83.1 per cent of the market share.
The outlook for interest rates being little changed over the last month has influenced borrowers into going for variable rate mortgages, according to Drew Wotherspoon. Tracker options are the most popular option on the market currently: ?The Bank of England’s announcement this month of an extension of the quantitative easing programme by a further ?25 billion is another indication that base rate is unlikely to rise in the next few months.?
Wotherspoon said: ?Even if longer term fixed rates don’t get much cheaper than those currently available at just under 5 per cent there seems a good prospect that borrowers on a variable rate will be able to benefit from rates more than 2 per cent lower for the time being and then switch to a similarly priced fixed rate later.?
There was some good news in terms of housing last month when first time buyer activity as a percentage of total purchases showed a marked increase, rising to 15.3 per cent, up from 10.4 per cent in September.
?Although many potential first time buyers are still shut out of the market because of the lack of an adequate deposit or failing to meet lenders’ onerous credit score requirements for high loan to value mortgages, several lenders have improved their pricing and availability of mortgages to 85 per cent and 90 per cent over the last month.?
