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Fixed rates 'very popular' last month

Fixed rate home loan deals enjoyed a mini-boom last month, broker John Charcol revealed yesterday.

However, the firm described the mortgage market as a whole as "dramatically subdued" in January, due in part to the continuing effects of the credit crunch.

Lenders' reluctance to expose themselves to excessive risk led to the subsequent withdrawal of zero-deposit 100 per cent loans among many.

Consumer fears were also stoked by a series of stories about small falls in house prices - raising the spectre of homeowners becoming trapped with negative equity.

However, the mortgage market picked up in February, with just over half (52 per cent) of home loan deals were fixed rates.

According to a John Charcol analyst, this is up from the general norm of 33 per cent.

Katie Tucker added that she was unsure as to the reason for this sharp increase in fixed rate take-up.

"The jump could partly be attributed to the borrowers' rush to take advantage of the new 'ultra-low' fixes with high fees [and] protect themselves, such as the 4.75 per cent from First Direct, or the 4.99 per cent from Abbey," she commented.

"However, January is always an unusual month for activity, this one being especially tumultuous, so an increased fixed rate take-up in February may be the result of January's cautious buyers returning late, having given the market time to settle."

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