Home owners in the UK are showing a preference for five year mortgages over the more traditionally popular two year deals, new research has found.
Some 48% of mortgages in the fourth quarter of 2017 were for five years or more while 40% were two year products, the first time they have been the most popular deal, according to the index report from mortgage firm Paragon.
Fixed rate mortgage products hit another record high at 91% of all cases, up 2%, the survey of mortgage intermediaries also shows.
The number of five year deals were up 7% quarter on quarter and 15% on an annual basis while two year mortgage products fell by 7% on the previous quarter and are 14% below the peak in the final quarter of 2014.
Meanwhile, the preference for tracker products reached another all-time low in the fourth quarter of 2017, down to 7% from 9% in the previous quarter.
In buy to let sector remortgaging continued to drive the market, with the proportion of buy to let remortgages back up to 52%, continuing a steep rise in remortgaging, up from 28% following the global financial crisis.
Despite a marginal decline in the final quarter of 2017, the principal reason for obtaining a buy to let remortgage is still for a better interest rate, making up 55% of all cases. Some 35% of landlords, the lowest figure recorded, used a buy to let remortgage to raise capital in the same period, as the disparity widens between the two reasons that were level at 45% just two years ago.
‘The results of our latest intermediary research highlight the overwhelming preference that the market has for fixed rate products and increasingly for longer term fixed rate products,’ said John Heron, managing director of mortgages at Paragon.
‘Much of this is driven by the understandable requirement that landlords have for payment stability into the future against an uncertain economic backdrop,’ he added.