Consumers opt for variable-rate mortgagesHomeowners move away from fixed-rate mortgages
28 August 2009
One in three homeowners are opting for a variable-rate mortgage following steep increases in the cost of fixed-rate deals, according to new research.
Mortgage broker John Charcol reported that 35% of its clients took out a variable-rate loan during July, more than double the 17% who took out a variable-rate mortgage in June.
Move reverses trend towards fixed-rate mortgage deals
The shift towards variable-rate mortgages follows an increase in the interest rate charged by mortgage lenders on fixed-rate deals during June and July. Consumers had previously flocked to fixed-rate deals in a bid to set their mortgage repayments before interest rates start to rise again.
Ray Boulger, senior technical manager at John Charcol, said: 'The rapid increases in the cost of fixed rates during June eroded their value in insuring against future interest rate increases and so in July we advised more clients to take a tracker or discount rate.'
He added that people with large mortgages were far more likely to opt for a variable-rate deal, often because they wanted the flexibility of being able to pay off their loan quicker without incurring charges.
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© Press Association 2009
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