Variable mortgages increase despite interest rates

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by Kay Murchie

The percentage of borrowers choosing variable mortgages has increased by 50% in spite of interest rates rising to 5.75% last month. This signifies growing consumer confidence that interest rates have peaked and property prices will stabilise in the second half of 2007.

A monthly mortgage survey by Spicerhaart Financial Services highlights that 86% of customers opted for fixed rate mortgages in July, the percentage of variable mortgages increased considerably from 9% to 14% of all deals.

A spokesperson for Spicerhaart Financial Services commented that fixed rate deals are still popular, making up 86% of all mortgages in July. The 2 year products declined by 5% from 60% in June to 55% in July. The 3 year deals and 4 year plus deals stayed the same at 13% and 18% respectively.

The proportion of high loan to value mortgages rose for the 6th consecutive month to a peak of 21% up from 19%. The amount of first time buyers also increased slightly to 37%.

The spokesperson concluded that the bulk of consumers are still choosing a fixed rate deal to guard themselves against further interest rate rises.