Variable rate popularity on the rise

More consumers are opting to take out variable-rate mortgage deals due to a belief that interest rates have now peaked, Spicerhaart Financial Services has advised.

Variable mortgages accounted for 21 per cent of mortgages in September – a two percentage point increase on the figure for August, Spicerhaart noted.

The firm added that two-year fixed-rates fell for the second month in a row and now account for 48 per cent of the market, though 79 per cent of borrowers still went for some kind of fixed deal.

"The proportion of borrowers opting for longer term fixed rate mortgages, of between seven to 25 years, remain relatively stable, but fixed two year products have seen the biggest drop, suggesting that borrowers expect an imminent drop in interest rates," commented Spicerhaart Financial Services operations director Steve Cox.

"Secure in their financial security, people are hedging their bets and opting for variable products rather than locking themselves in to the current high rates," Mr Cox added.

Gross mortgage lending dropped from £34.1 billion to £32.2 billion month-on-month in September, the Council of Mortgage Lenders reported last month.



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