longer term fixed rates clients still opt with their brokers for shorter term products. The proportion of loans which are fixed compared to variable has been volatile over the years with a peak of 73% in 2007 and a low point of 19% in 1996. The last recorded statistics from the Council of Mortgage Lenders in July 2011 revealed fixed rate mortgages had a 60% share of the market. Some might think this strange in that we are still at historic low rates of interest and therefore why more than 60% of people do not fix is slightly surprising. Particularly with clients with large amounts of equity in their properties there is a wealth of relatively cheap fixed rates in the market – often less than 3%. This is surely a good time to bank a great rate for the next few years and just take out any risk of volatility in the market. Many people will be saying rates cannot rise too quickly given the state of the economy but we do know that things do change with great surprise. Who would have thought


“The last recorded statistics from the Council of Mortgage Lenders in July 2011 revealed fixed rate mortgages had a 60% share of the market. Some might think this strange in that we are still at historic low rates of interest and therefore why more than 60% of people do not fix is slightly surprising.”


that RBS shares would now be just over 20p when only a few years ago they were £6.80 and nobody, if they are truthful, ever saw the banking collapse? Could this happen the other way around where inflation gets out of hand people start thinking that recapitalisation of banks in the Eurozone has just about been achieved and it would be safe to start raising interest rates slightly? As far as the 40% of clients who are choosing variable rate mortgages I guess this is because the pay rate is still currently cheaper that fixed rates. You could take the view that if you are only doing a 2-year tracker then you could potentially be overpaying for part of that period of time for the privilege of security of rates. But isn’t that the purpose of insurance premiums? All in all it seems extremely unlikely that fixed rates will significantly exceed 60% until it’s too late: often people jump into fixed rates when they see the swaps rising and pay rates starting to increase. n


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