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90% of mortgage applicants choosing fixed rate loans

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Falling rates have seen over 90% of new mortgage applicants opt for fixed rate mortgages, according to data from Mortgage Advice Bureau (MAB).

Its National Mortgage Index found that five-year fixed rate products had fallen to their lowest price since the summer of 2007. The average five-year fixed rate now stands at 4.57%.

MAB added that both two and three-year average rates had reached their lowest level since March. were lower than at any time since March. This has seen 90% of borrowers choosing fixed rate products for house purchase and 89% for remortgaging.

The number of products available to intermediaries also grew for the eighth successive month, with 6,198 different products now available to mortgage brokers.

MAB found that the average LTV for house purchase was 71% and the average size of purchase deposits during the month was £63,779, over £8,000 higher than at the same point last year.

Brian Murphy, head of lending at the Mortgage Advice Bureau, said: “The fact a number of high street banks lent significantly less than they expected earlier in the year means it is a great time for prospective buyers and those refinancing their property to secure a fantastic rate on their mortgage.

“It is therefore no surprise to see fixed rates being the default choice for the overwhelming majority of borrowers.

“Looking ahead, we expect the Funding for Lending Scheme to gain momentum into the New Year and prompt more banks to follow the lead of the early adopters by increasing their total lending.

“Competition for business can only be a good thing for consumers, who stand to benefit as rates continue to fall.”

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