Information Publicity

• Last week, the government renewed its commitment to encouraging greater take-up of longterm

fixed rate mortgages. We look forward to seeing more details of its plans for covered
bond legislation and a review of wholesale funding.

• Rising interest rates – and the increasing amount of income spent on mortgages – have been

driving consumer preferences for fixed rate mortgages deals. Borrowers have been taking them out in
record numbers, and they can already choose between short- and long-term fixed rate mortgages loans.
Most are opting for short-term deals. Only around 10% of recent fixed rate mortgages loans have been
taken out for periods of five years or longer.

• Price is a strong factor in determining consumer choice. Short-term fixed rate mortgages deals can be

cheaper than long-term ones – particularly for those with large mortgages – even when taking
account of arrangement fees. This is partly because lenders have to allow for greater
uncertainty when pricing mortgages over the long term.

Labels: MLM, Mortgages