The Index reveals that 26% of borrowers took a fixed rate in May, the highest level since October 2009. Drew Wotherspoon, director of marketing at John Charcol, commented on this and other findings.
"A combination of widespread uncertainty in the economy, magnified by equal uncertainty in the political landscape, and a significant reduction in their cost, led one in four borrowers to plump for a fixed rate in May. This is the highest figure for over six months, as some borrowers begin to look for real safety in what are bound to be some choppy years ahead. The Sword of Damocles is currently hanging right above the UK and no-one can really be confident that it won't fall soon. For those who favour a fix, the recent addition of some new, excellent five and 10 year fixed rates to the market, is good news and I would expect the increase in take up of fixed rates to continue in the coming months.
"Knowing what the future for interest rates looks like is an exercise in crystal ball gazing, but the reality is that there is only one way interest rates can now move - it's just when and by how much. Some borrowers are undoubtedly still adopting a wait and see approach, but the narrowing in the price differential between fixed and variable rates over the last few months has led some to act now. In March of this year, the difference in rates between product genres was as high as 2.5%, but this has shrunk to just below 1.5%, which has clearly been enough to tempt more consumers to take a fix.
"What this unquestionably highlights is that borrowers must seek advice on their own specific situation. Which product is right for them will be dependent on a myriad of criteria, and generic advice simply will not do."
