UK mortgage borrowers look for stability
Mortgage borrowers in for long-haul
Tuesday, 29, Jul 2008 03:15
New figures reveal Brits are increasingly turning to long-term mortgages in their search for financial stability.
According to mortgage comparison service mform.co.uk, more than 45 per cent of searches for mortgage deals in the past three months have been for terms of five-years or more,
This contrasts with the pre-credit crunch market, where borrowers focused on two and three-year deals so they were free to move from lender to lender to cash in on the best offers.
It appears, however, stability is now paramount to flexibility.
"Availability has been the major issue for borrowers this year as the mortgage market has at times descended into mayhem with products withdrawn at short notice and rates rising and then falling," said Francis Ghiloni, marketing and business development director at mform.
"Given the continuing uncertainty we can understand why it makes sense for borrowers to lock in to longer term deals so that they can plan their future and have a degree of stability and security.
"They're opting to take a deal and then sit out the mortgage merry-go-round until it settles down."
The research supports findings from MoneyExpert.com, which show lenders are offering an increased number of long-term mortgages in the wake of the credit crunch.
According to the price comparison website, the number of mortgage products over ten-years in length has increased from eight to 15 per cent of the market in the last year.
Analysis from mform also shows the best rates on five-year deals are currently just under six per cent compared with 5.49 per cent for the best two-year deals and 5.79 per cent for top three-year offers.
Abbey today also confirmed the rise of long-term fixed-rate mortgages, with 60 per cent of the bank's own customers remortgaging with fixed-rate deals of three years or more.
Chris O'Toole