Half new borrowers choose fixed rate mortgages

Fixed rate mortgage saw their popularity reach a year high in June attracting 48% of new borrowers, according to CML data.

Fixed rate deals have been unpopular in 2010 due to the low bank rate but a fall in fixed rate prices helped to boost their take-up in June.

Mortgage lending as a whole increased rapidly in the month, with 52,000 loans collectively worth £7.6bn advanced. This represents a 19% increase in volume and a 14% rise in value on home loans in May 2010.

On the whole, Q2 saw an increase in mortgages, with 136,000 new loans together worth £19.7bn taken out. The volume and value of mortgages is 20% up on Q1 and 30% up on Q2 2009's figures.

Of those new loans in Q2, 52,200 were to first-time buyers, up from 43,400 in Q1, and 85,300 were home mover loans.

"For the time being, the effects of government spending cuts have yet to make an impact on mortgage demand, and activity continues on its upward trajectory," says CML economist Paul Samter, "but we still expect house purchase activity to be muted in the coming months.

"Both consumer demand and lending capacity remain distinctly difficult to call, especially in the light of the government's austerity measures and their possible impact."