The popularity of fixed-rate mortgages continued to fall in October, with their share of the market falling to 26.3%, according to John Charcol.
This is the smallest market share since November 2008, and a dramatic decline from a peak of 83.1% just four months ago.
Drew Wotherspoon, spokesperson for John Charcol, says: "The rollercoaster movement in product choice reflects the rapid change in mortgage pricing and interest rate sentiment over the last year. With the outlook for interest rates little changed over the last month an even higher proportion of borrowers chose a variable-rate mortgage, in most cases a tracker.
"The Bank of England's announcement this month of an extension of the quantitative easing programme by a further £25bn is another indication that Bank base rate is unlikely to rise in the next few months. Even if longer term fixed rates don't get much cheaper than those currently available at just under 5%, there seems a good prospect that borrowers on a variable rate will be able to benefit from rates more than 2% lower for the time being and then switch to a similarly priced fixed rate later."
Wotherspoon says first-time buyer activity as a percentage of total purchases increased to 15.3% in October, although many potential buyers are still shut out of the market because of the lack of an adequate deposit or failing to meet lenders' onerous credit score requirements for high-LTV mortgages.
‘Important to have an anchor’
Lack of innovation for solutions
Some 2,000 consumers affected
Achievements, charity work and other happy snippets