Intermediaries are writing more mortgage business with longer-term initial rates, Paragon Mortgages has claimed.
The results from the specialist lender’s quarterly intermediary tracking survey (FACT) for Q1, showed 30% of cases were for terms of five years or more (trackers and fixed rates). This is an increase on the previous quarter (26%). At the same time, there was a reduction in two and three year terms, dropping from 71% to 66%.
Intermediaries have reported a decline in popularity of tracker rate products since mid-2012. Survey results showed a continuous fall from Q3 2012 to Q2 2014. However, this trend appears to be shifting, with tracker products accounting for 18% of cases in Q1 2015 (15% of cases in Q4 2014).
Despite the modest improvement in the sale of tracker products, fixed rates continue to be the most popular with intermediaries recommending a fixed rate product in four out of every five sales.
Generally, intermediaries are also feeling more positive about future levels of mortgage business, with on average those surveyed expecting a 6% increase in case volumes in the second quarter.
John Heron, Paragon’s managing director, said: “The gap between fixed rate and tracker rate sales widened significantly from the start of 2012, and it is not since 2010 that we have seen tracker and fixed rates selling in equal numbers.
“Whilst concerns over imminent increases in interest rates may have abated, it is clear that landlords are continuing to take a cautious approach by selecting fixed rates in much larger numbers and over longer periods.”
