Low interest rates on variable rate mortgage 'prove popular'

Posted: 21 Jan 2010 10:41:50 GMT

Homebuyers are increasingly opting for variable rate mortgages thanks to the historically low level of Bank of England interest rates, it has been reported.

According to mortgage broker John Charcoal, 81 per cent of the home loans it approved in December were variable rate deals.

This marks the seventh month in a row where variable rate take-up has risen.

Many economists do not anticipate that the base rate will rise in the near future from the 0.5 per cent benchmark that was set in 2009.

Ray Boulger, of John Charcoal, states that on average there is a 1.5 per cent difference between fixed-rate and tracker mortgages.

He comments: "It will currently take a substantial rise in bank rate for a borrower who takes a tracker to be worse off than one who opts for a fixed rate."

Alan Clarke, UK economist at BNP Paribas, recently advised that he does not expect Bank of England interest rates to rise until the latter part of 2011.

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