Variable rate mortgages still proving popular - Mortgages - News - Moneyfacts

News

Moneyfacts.co.uk News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

Variable rate mortgages still proving popular

Variable rate mortgages still proving popular

Category: Mortgages

Updated: 29/10/2009
First Published: 29/10/2009

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
The popularity of fixed rate mortgages continues to decline, with variable rate mortgages now taking almost two thirds of the market, new research has revealed.

Just over a third of borrowers chose a fixed rate in September, the smallest proportion seen this year, while the suggestion is that the trend is set to continue in October, according to John Charcol.

Ray Boulger from the independent mortgage adviser said that most fixed rates still looked too expensive, although the best fixed and variable rates had got cheaper over the month, with real competition emerging in some sectors of the market.

"Yesterday saw Northern Rock launch a 4.99% five year fix up to 70% LTV with a relatively low fee of £595 for purchases and this new aggressive stance is helping drive some value back to the fixed rate market," he commented.

"Nothing has happened over the last few weeks to change our view that interest rates will remain low well into 2011 and last week's weak GDP figures, showing that we are now in the longest recession since records began, supports this view.

"Consequently we have continued to advise the majority of our clients to take a variable rate mortgage, as the differential between fixed and variable rate pricing still means that fixed rates are discounting a quicker and larger rise in interest rates than looks likely."

Meanwhile, the proportion of mortgages issued for house purchase increased slightly over the month to 57.8%, a record for the year. However, first time buyer activity as a percentage of total purchases remained subdued at 10.4%, with many potential entrants to the market still either struggling to find a deposit or failing to meet lenders' onerous credit score requirements for high LTV mortgages.

"If first time buyers had anticipated having to save for a deposit, no doubt many would have cut back on discretionary spending and started saving earlier, but with 100% mortgages being readily available to those with good credit until early last year, the need to save was not such an obvious necessity until then, even though it was always the sensible thing to do," Boulger added.


Compare variable rate mortgages

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Homemover numbers fall for first time since 2011

The mortgage market enjoyed a record year in 2016, so it may come as a surprise to hear that the number of people moving home has fallen for the first time in five years, with fewer apparently taking advantage of the market.

2016: the best year for remortgaging since 2009

Remortgaging has certainly seen a surge in activity of late, helped in no small part by the dramatic drop in mortgage rates over the last year, so much so that 2016 as a whole proved to be the best year for the sector since 2009.

Homeowners underestimate remortgaging savings

Remortgaging has been enjoying a surge in popularity in recent months, and considering how much you could save, it’s a no-brainer! Unfortunately, many fail to realise the extent of potential savings, which could mean too few make the switch.
 
Close