According to the Council of Mortgage Lenders and the British Bankers Association, mortgage lending to the public increased in July. The Council of Mortgage Lenders reported an almost £1bn increase in lending over June, whilst the British Bankers Association reported a slight fall since June but an overall increase of £6bn on last year. The general consensus is that the rises are due to seasonal interest. However, more and more people are opting for fixed rates.
Our View
The amount of people opting for fixed rates is definitely increasing. People can see interest rates gradually rising and do not want to get caught out. What people need to be wary of is fixed rate deals that tie you in with large redemption penalties. If interest rates do not continue to rise, a large number of homeowners will be locked into fixed rate mortgages they can’t easily get out of, to take advantage of stable or lower rates.