The number of borrowers opting for variable interest mortgages was up 50% in July, despite the recent rate rise to 5.75%.
The Spicerhaart Financial Services monthly mortgage survey revealed fixed rate products remained the most popular, but variable mortgages increased from 9% to 14%, the highest share of deals since October 2006.
Within variable deals, 11% chose base rate tracked mortgages, while 1.7% choose discount deals and 1.3% opted for other variable rates.
“The increasing proportion of variable mortgages indicates that borrowers are starting to believe that interest rates have finally peaked, as inflation stabilises, and are likely to come back down again before the end of the year,” Spicerhaart operations director Steve Cox says.
“With interest rates still historically low, homeowners and first time buyers, still confident in their financial security, are as keen as ever to move up the property ladder, even if this means borrowing slightly more.”
Fixed rate two year products decreased by 5% to 55% in July, while three-year and four-year plus deals remained at 13% and 18% respectively.
High loan to value mortgages rose for the sixth consecutive month, to 21%, while first time buyers increased to 37%.
“Perhaps surprisingly, shorter term fixed rates saw a slight slip in popularity last month,” Cox says.
“However, the majority of consumers are still opting for fixed rate deals to protect themselves against further rate rises.”
Cox also says buy to let mortgages remained strong, accounting for 14% of the market share.
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