According to the Council of Mortgage Lenders the interest rate cycle has reached its floor and as many expect the rates to remain low they are looking ahead and going for deals that will see them through the years to come.
In April some 69% of borrowers took out fixed rate mortgages with an average of 4.83%, the highest share since June 2008.
The latest figures from the CML also show that although there is a modest improvement in the number of loans for property purchase, activity is still low by historical standards. There were 35,600 house purchase loans in April, compared to an average of 88,000 loans in April over the last seven years.
The number of loans for remortgage also continued to decline as low reversion rates and stricter credit criteria for the best deals has made refinancing less attractive.
'With the interest rate cycle now at its floor, an increasing proportion of borrowers are taking out fixed rates, including for longer term periods of 5 to 10 years. With expectations for rates to remain low in the near future, shorter term fixed-rate deals are less appealing than attractively priced variable rate deals,' explained CML head of research, Bob Pannell.
'There are tentative signs of house purchase lending stabilising, but we need to see considerably higher transaction levels to underpin house prices,' he said.
Overall there were 31,000 remortgage loans in April, 22% down on March and 65% down on April last year. Gross mortgage lending in April was £10.5 billion, down from £11.5 billion in March.
There were 22,100 loans to home movers worth £3.1 billion, compared with 30,600 loans worth £5 billion in April last year. Lending criteria continued to edge down with a typical home mover putting down a 33% deposit and borrowing 2.63 times their income, compared with 30% and 2.69 in March.
There were 13,500 loans to first-time buyers worth £1.4 billion, compared with 18,800 loans worth £2.4 billion in April 2008. The average first-time buyer had a 25% deposit, unchanged since February, and borrowed 2.96 times their income compared with 2.99 in March.
