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Fixed rate deals 'less popular'

The number of borrowers opting for fixed-rate mortgages is decreasing and has dropped seven per cent since December, statistics compiled by The Times newspaper have revealed.

Using data from the Council of Mortgage Lenders (CML), the Times has shown that this is the lowest level for fixed-rate deals for three years.

However, the popularity of tracker mortgages has increased and a significant number were purchased in January.

The decline in popularity of fixed-rate arrangements has been partly blamed on the rise in fees for setting them up. This has soared by 40 per cent in two years. Calculations by moneysupermarket.com show this makes the cost of a two-year fixed-rate deal comparable to a three and five-year deal.

Speaking to the Times, David Hollingworth, of London and Country, said:

"Longer-term mortgages are potentially a viable solution, and we could see the popularity of two-year fixes wane,

"Lenders may also start to concentrate on the three to five-year fixed-rate market to bring in longer-term business."

Predictions of the base rate falling in 2008 have also contributed to the rise in popularity of the tracker mortgage.

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