Fixed-rate mortgages 'became more popular in May'

Some 26 per cent of borrowers took on a fixed-rate mortgage in May, the highest level since October 2009, according to the latest John Charcol Mortgage Index.

Drew Wotherspoon, director of marketing at the firm, said a combination of widespread uncertainty in the economy, magnified by equal uncertainty in the political landscape, and a significant reduction in fixing costs has encouraged higher demand for the products.

He claimed that some borrowers are looking for real safety in "what are bound to be some choppy years ahead".

"For those who favour a fix, the recent addition of some new, excellent five and ten-year fixed rates to the market, is good news and I would expect the increase in take up of fixed rates to continue in the coming months," he added.

Mr Wotherspoon said it is impossible to predict what will happen to interest rates in the coming years, but there is only one way they can go eventually - and that is upwards.

"Some borrowers are undoubtedly still adopting a wait and see approach, but the narrowing in the price differential between fixed and variable rates over the last few months has led some to act now," he claimed.

According to Chelsea Building Society, a surge in demand for five-year fixed-rate mortgages has been seen since the turn of the year.

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2010-06-18 13:52:38 © Moneyextra.com