Money News
New research from estate agents, Hamptons International, shows more homeowners going for variable rate mortgages than fixed rate deals - on the assumption that interest rates are at or close to their peak in the present cycle.
Variable rate deals accounted for 55% of loans taken out during July - the first time they've overtaken fixed rate deals in terms of popularity this year.
While 45% of borrowers took out fixed rate deals and 2-year fixes remained the most popular at 36%, this was significantly down on the 55% uptake back in January
Meanwhile, the proportion of people taking out 2-year variable rate deals more than doubled from 22% back in January, to 46% in July.
While the decline in popularity of fixed rate mortgages reflects an increasing belief that interest rates have peaked, it's also worth noting that current offers will have priced in any future (short term) increases in rates, whether they happen or not. And as Jonathan Cornell, technical director of Hamptons Mortgages, makes the point, many borrowers will no longer wish to lock themselves into fixed-rate deals which have every possibility of decreasing over the coming years.
21 August 2007 © Moneyextra.com
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