Paragon Mortgages’ latest Financial Advisors Confidence Tracking (FACT) Index report, based on interviews with around 200 mortgage intermediaries, reveals that fixed term mortgage products remain the most recommended, with an increased preference for five year fixes evident.
Five year fixes accounted for 32% of product applications submitted by intermediaries in Q3 2016, up from 29% in the previous quarter. The growth in popularity of five year products is part of a long-term trend, with five year fixes accounting for 29% of business in the same quarter two years ago, and 24% in Q3 2013. Whilst numbers remain low, fixed rates of longer than five years are also growing in popularity and accounted for 2% of business in the latest quarter, up from 1% in Q1 2016.
While fixed rates overall remain the most popular choice for borrowers, making up 81% of applications introduced in Q3 2016, there has been a small increase in preference for variable rate products (from 2% in Q2 2016, to 3% currently) and for tracker products, up from 13% to 15% in the latest data.
John Heron, Managing Director, Paragon Mortgages, said...
The economic outlook remains uncertain and volatile. With some very low longer term fixed rates available in recent weeks it is no surprise that intermediaries are recommending these products to landlords who need a stable payment profile to help them manage the increase in tax that many will see as the changes introduced in the summer budget of 2015 start to bite.