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.
Which? Best Buy mortgages
Whatever type of mortgage you’re looking for, Which? Best Buy mortgage reviews will help you find the best deal for you. You can also search for a mortgage that’s tailored to your own circumstances using the Which? mortgage finder.
For more details on how to choose a mortgage, read the Which? guide to how to get the best mortgage deal.
© Press Association 2009
Which? Money when you need it
You can follow @WhichMoney on Twitter to keep up-to-date with our Best Rates and Recommended Provider product and service reviews.
Sign up for the latest money news, best rates and recommended providers in your newsletter every Friday.
Or for money-saving tips, and news of how what’s going on in the world of finance affects you, join Melanie Dowding and James Daley for the Which? Money weekly money podcast
For daily consumer news, subscribe to the Which? news RSS feed here. And to find out how we work for you on money issues, visit our personal finance campaigns pages.