New figures show increase in take up of variable mortgages

on Mar 23, 2015

The Mortgage Advice Bureau has released new data showing that more borrowers opted for variable rate mortgages in February than at any time since November 2012. The new data revealed 10.1 percent of homebuyers and those looking to remortgage decided to go for variable rate mortgages, with a view to taking advantage of the historically low interest rates set by the Bank of England. This was up 1.5 percent from January and the highest level of variable mortgage uptake in 27 months.

Many analysts predict that the base interest rate is unlikely to change until mid-2016, this potentially allows those on variable mortgages some breathing space before having to account for possible changes which the Bank of England may impose next year.
Also, the figures reveal that the current period of low interest rates has required mortgage lenders to adapt accordingly, resulting in large numbers of lending products being offered to potential borrowers in an attempt to attract business from what is an increasingly competitive market.
The intense competition has led to a new record of 12,940 products being available in February, breaking the previous record of 12,925, which was set last December. Furthermore, the figure is 18 percent higher than that of February 2014, marking a significant increase in product numbers in the last 12 months.
The recent increase in those opting for variable mortgages may also indicate a reduction in the level of caution being exercised by house buyers, as worries regarding the impact of stamp duty subside and the traditional lull in activity over the New Year dissipates.
Brian Murphy, head of lending at Mortgage Advice Bureau, commented:
“Just six months ago it seemed that that low interest rates were experiencing a last hurrah. But with inflation also at record lows, the 0.5% base rate has sailed past its sixth anniversary unscathed and is continuing to tempt lenders into offering attractively priced deals. Product numbers continue to rise and changes in the market over the last year mean that lenders are increasingly leaning on brokers to match their products to suitable borrowers.”

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