Short-term fixed-rate deals 'still popular'

While there has been recent political discussion about the value of long-term fixed-rate home loans, short-term fixed rates continue to be popular, particularly on first-time buyer mortgages, new figures reveal.

According to the Council of Mortgage Lenders (CML), 89 per cent of first-time buyer mortgages were on fixed rates in May, continuing the trend that emerged in April, when 88 per cent of new buyers took up fixed-rate deals.

Some 73 per cent of home movers opted for a fixed-rate package in May, from 72 per cent in April.

The CML's survey illustrated the burden that rests on first-time buyer mortgages at the current time, with income multiples standing at 3.37 times the average new buyer's income, up from 3.33 times in April.

Michael Coogan, director general of the CML, said: "For anyone wanting to get a foot on the property ladder or move house, each month affordability is becoming worse.

"The record number of borrowers who are now paying stamp duty makes a difficult situation even worse, despite the financial windfall to the Treasury. This needs to be addressed urgently."

Mr Coogan said it is "essential" that borrowers speak to their lender if they are having repayment difficulties, as financial problems are expected to rise over coming months.

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