Variable mortgage rates prove popular
New research by independent mortgage broker John Charcol has shown that variable rate mortgages are gaining headway among customers against fixed-rate alternatives.
Its customers are increasingly abandoning fixed-rate mortgages due to interest rises over the past few months, allowing deals with variable rates to gain ground.
The report showed that 35 per cent of those looking to take out a home loan with the mortgage broker in July chose a variable rate deal, up from 17 per cent in the previous month.
Popularity among fixed-rate mortgages has been a "roller-coaster ride", according to the firm, with a 19-month look at the take up of such deals showing a peak of over 60 per cent market share in April 2008 followed by a low of less than 20 per cent in October the same year.
The products then gained favour among mortgage borrowers again in April this year, with the new research indicating yet another drop at the moment.
Ray Boulger, senior technician at the mortgage lender, said: "We have seen a further dramatic fall in the take up of fixed-rate mortgages this month and it looks almost certain that fixed rates will take less than half of the market in August, both by case number and volume.
"This reflects the changing views on how long interest rates will stay low and in particular the actions of the Bank of England this month in the major extension of its quantitative easing programme," he added.
With many households on a fixed-rate mortgage seeing their term come to an end in the autumn months, one expert recently advised switching to a standard variable rate (SVR) deal.
Writing for This Is Money, Neil Simpson said fixed-rate mortgage customers should ignore any letters from lenders advertising similar deals to take up after their term ends, as SVRs can offer more for their money at the moment.
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