Borrowers flock to variable deals
While fixed rates are still the dominant force in the indystry, 10.1% of homebuyers and remortgaging homeowners opted for variable products.
Customers looking to remortgage were most likely to apply for variable deals, with 12.8% doing so compared to 9.0% of homebuyers.
Brian Murphy, head of lending at Mortgage Advice Bureau, said: “While fixed rates remain the majority preference as people put their finances on a stable footing, it is no surprise that the lower rates available on some variable deals are attracting more interest.
“Comments from the Bank of England have clearly inspired confidence that low rates are here to stay for the foreseeable future.
“Some homeowners and buyers may feel there is still a window to make a short term saving through cheaper variable rates, and then lock in at a later date around the time of the first rise.”
In February variable products were most popular in London, (16.6%) followed by the East Midlands (10.0%) and the South East (9.9%), while at the other end of the spectrum just 4.7% of borrowers chose variables in Wales.
Murphy added: “Homeowners and buyers in London often have more spending power behind them, which can give them extra confidence to seek a saving through cheaper variable deals and accept the chance that rates may rise and negate the benefits.
“Even though homeowners in Wales borrow significantly less [£85,961 for the average remortgage loan during February compared with £333,044 in London], they typically put more emphasis on the security of knowing their repayments will not change from one month to the next – even if it means paying a slightly higher price to begin with.”
Remortgaging customers were more likely to opt for a variable rates than new buyers everywhere in England and Wales except from Yorkshire and Humberside (9.7% vs. 6.8%).