An increasing number of borrowers are turning to shorter-term fixed rate mortgages in response to higher rates, Moneyfactscompare.co.uk has found.

The firm revealed that the share of users on its website comparing two-year fixed mortgages increased from 48.4% in February to 55.6% in May.

Demand for five-year deal dropped from 27.7% to 21.8% in the same period, while searches for 10-year fixed mortgages also eased from 6.5% to 4.5%.

While the average five-year mortgage fix (5.68%) is lower than the average two-year (5.78%) in May, demand has continued to shift towards shorter-term deals.

Moneyfacts said that more borrowers appear to be willing to take a calculated risk that they will have the opportunity to refinance sooner at lower rates instead of securing the lowest available rate.

Head of consumer finance at Moneyfactscompare.co.uk, Adam French, stated: "It appears many borrowers believe the recent spike in mortgage rates will prove temporary and are willing to pay a small premium for a shorter fix in the expectation that they will be able to refinance onto a more competitive deal in the future.

"The continued decline in demand for 10-year fixes backs this up. Unsurprisingly, borrowers are reluctant to commit to today's rates for the long term, despite the payment certainty these products can offer.

"Unlike homeowners in some other countries who routinely fix their mortgage rates for decades British borrowers want the security of a fixed monthly repayment but value the flexibility of shorter-term deals. Regardless of the volatility of the last few years many seem to be positioning themselves for a future where mortgage rates are lower than they are today.”

---