Fixed-rate mortgage comes of age

The fixed-rate mortgage has just passed its 21st birthday, having been launched by Halifax in 1988 at an astonishing rate of 12.75%.

However, the lender is celebrating the enduring appeal of this type of home loan with the following facts and figures:

By 2009, 68% of new mortgage lending took the form of fixed-rate deals, according to Council of Mortgage Lenders’ data.

There are currently over 1,300 fixed-rate loans on offer from 69 lenders, compared with 12 such loans provided by 12 lenders in February 1989; the market peaked in 2007 with over 1,500 fixes to choose from.

In the early days of fixed-rate mortgages, the standard term was two years with three or five year deals only available occasionally.

In February 1989 the average fixed rate stood at 12.55%, dropping to 6.33% in 2007 and 5.38% today.

The research also reveals that the popularity of fixed-rate mortgages tends to increase when interest rates are on the rise, although 2009 threw up a different response with a rising number of new borrowers opting for fixes, despite plummeting interest rates.

Halifax mortgages commercial director, Stephen Noakes, says: “Ever since their introduction 21 years ago, fixed rate mortgages have been fundamental for homeowners looking for certainty and stability in managing their household expenses, and this is an important milestone to mark.”