UK borrowers are increasingly going for two-year fixed rate mortgages over longer term deals as competition begins to return to the market, a survey suggests.
A Spicerhaart Financial Services poll reveals 32 per cent more borrowers opted for a short term two-year fixed deal in August.
In contrast, the number of longer-term fixed rates dipped by 12 per cent. However, despite the level of two-year fixed rate deals being at its highest for four months, they are still down by over 52 per cent from August 2007.
Spicerhaart Financial Services operations director Steve Cox said:
“Borrowers are now attracted to short-term deals thanks to the drop in lending rates, with the average two year fixed mortgage rate now standing at 6.39 per cent compared to 7.08 per cent in July”.
He added “increasingly competitive rates” were reversing a previous trend of people looking for longer-term security.
Other figures from the firm show first-time buyers are now playing a bigger part in the market, and are now involved in seven per cent more transactions than at the start of the year.
However, the good news was somewhat overshadowed by figures from the Royal Institute of Chartered surveyors, showing the average number of transactions per agent fell further in August.
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