The Council of Mortgage Lenders recently reported that 71 percent of all mortgages and remortgages were set up with fixed rate terms in April 2006. This is 17 percent more than the same time last year. Fixed rate deals are becoming more popular because lenders are making attractive offers and consumers want to lock in the current low rates for as long as possible.
The balance shifted a little bit toward new mortgages and away from remortgages. This could be because lenders made the benefits of remortgaging less appealing to existing borrowers by raising exit fees. (By the way, the government is looking into that increase right now.) First-time buyer mortgages got a little bigger, averaging GBP106,400. This is almost GBP12,000 more than they were in April of last year. First-time buyers now borrow an average of 3.21 times their income, which is also a small increase from last month. The average mortgage payer now spends 16.2% of their income on their mortgage, which is slightly less than before. The Council says this is likely because more people are getting fixed rate deals.
There have also been a lot of new fixed-rate mortgage deals, where lenders offer to keep rates the same for as long as 15 years. That sounds crazy until you realise that it shows a lot of faith in how stable the money markets will be in the future. Information that gives us all hope.
All of these things about mortgages are getting to a point where I'm worried. Not only are people borrowing more and for longer, but they're also agreeing to pay back more of their income than ever before. All of this is because house prices have been going up and up over the past few years, and some people are afraid that if they don't buy a home now, they never will.
