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House buyers turn to fixed-rate mortgages

Dominic Welling dominic.welling@consumerchoices.co.uk

Fixed rate mortgages gained in popularity in June, according to the latest figures from the Council of Mortgage Lenders (CML).

Almost half (48%) of new borrowers took out a fixed rate mortgage in June, the highest proportion so far in 2010.

In May, only 45% of buyers went for fixed-rates.

A year ago however 70-80% of buyers were opting for a fixed-rate mortgage, according to the CML.

However fixed rate prices are starting to fall so they are growing in popularity again, it added.

Paul Samter, an economist at the CML, said: “We still expect house purchase activity to be muted in the coming months. Both consumer demand and lending capacity remain distinctly difficult to call, especially in the light of the government's austerity measures and their possible impact.”

Meanwhile, mortgage lending also increased significantly in June, with 52,000 loans advanced to home buyers - up 19% from May.

Lending for remortgage customers also increased, albeit modestly, to 27,000 loans. This was up from 26,000 in May and down from 34,000 a year earlier.

The CML added that credit criteria has become a little more fluid recently but remains tight overall.