Borrowers turn to fixed mortgages

Mortgage deals became cheaper last month

Fixed rate mortgages are at their most popular for nearly six years.

Figures from the Council of Mortgage Lenders (CML) show that in July fixed rate deals accounted for 50% of all new home loans, up from 47% in June.

Other figures from the CML showed that gross mortgage lending fell by 2% in July to £25bn, leaving it 13% lower than a year ago.

"The housing market has started to stabilise at a new lower level," said CML director general Michael Coogan.

Lending slowdown

However, the British Bankers Association (BBA) said that net mortgage lending by its own members slowed down last month.

Lending in July was below the average for the previous six months.

"July's growth in lending to individuals slowed from the recent trend," said BBA spokesman David Dooks.

"This could have reflected consumers waiting for the widely anticipated cut in interest rates."

In fact, rates on fixed mortgage deals had already started to drop in anticipation of the cut in interest rates earlier this month.

The CML's figures show that the average price of a fixed rate deal fell for the ninth month in a row, to 5.31% in July from 5.36% in June.

The organisation said that the average variable rate mortgage also became cheaper, the typical cost dropping for the seventh month in a row, to 5.68% in July from 5.76% the previous month.