In the last three months, the number of mortgages being borrowed on a variable rate basis has increased from 24 per cent to 35 per cent according to Legal & General’s Mortgage Purchase Index series.
Over a third of residential mortgages were variable rate in comparison with under a quarter in the period from April to June this year.
Stephen Smith, Director of Housing at Legal & General, said:
“Trackers will have attracted greater attention as forecasts of base rate cuts become more prominent. The popularity of variable rates has also perhaps been boosted by the number of borrowers sticking with their lender’s standard variable rate when they came to the end of a deal rather than remortgaging straight away.”
Also, tracker rate and variable rate mortgages look to have become increasingly popular with buy-to-let borrowers in the last quarter. In the period from April to June this year, 58 per cent of buy-to-let mortgages were fixed rate and just 41 per cent of mortgages were variable rate. In this last quarter the share had turned around as variable rates became the most popular buy-to-let mortgage type with 55 per cent and fixed rate mortgages represented only 43 per cent. This could be due to the recent interest rate cuts by mortgage lenders combined with a more optimistic outlook from buy-to-let borrowers.