12 Aug

Fixed-rate mortgages 'increasing market share'

Fixed-rate mortgages 'increasing market share'

The share of the mortgage market being taken up by fixed-rate deals has increased, new figures show.

Council of Mortgage Lenders (CML) data for June 2008 showed that this kind of deal accounted for 69 per cent of all mortgages, compared with 66 per cent in May.

The CML suggested that this trend is likely to continue, as falling swap rates enable lenders to go on reducing the cost of their products.

Another finding of the survey was that the average salary multiple being paid has fallen, with first-time buyers paying an average of 3.33 times their income in June compared with 3.35 in May, while for home movers the multiple dropped in the same period from 2.97 to 2.94.

While swap rates could be one reason for the increased popularity of fixed rates, another may be the way such products remove the uncertainty over how payments could be affected by changes in the Bank of England base rate.

This would include protection from any increase in the rate the monetary policy committee may be tempted to make following news today that consumer price index inflation has climbed to 4.4 per cent.

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