Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Strategy. Read the original article for full details.
Two-Year Fixed Mortgages Gain Popularity as Borrowers Seek Flexibility
Borrowers are increasingly opting for two-year fixed mortgage rates, according to analysis of search activity on Moneyfactscompare.co.uk. The proportion of borrowers looking at two-year fixed rates rose from 48.4% in February to 55.9% in June, while interest in five-year fixed deals declined over the same period.
Moneyfacts found that the trend is particularly strong among remortgage borrowers, with demand for two-year fixes increasing from 59.5% to 66.5%. Among homemovers, the share rose from 40.9% to 52.1%. In contrast, the proportion of first-time buyers searching for two-year fixes decreased slightly, from 66.3% to 65.5%.
The report notes that most first-time buyers typically borrow at higher loan-to-value (LTV) ratios, where some five-year fixed rates are cheaper than two-year deals. For borrowers with more equity and lower LTVs, two-year fixed rates are now generally cheaper than equivalent five-year options.
These shifts in borrower preferences may be relevant for letting agents and inventory clerks, as changes in mortgage trends can influence landlord and tenant activity in the UK property market.
Source: Mortgage Strategy