subject: Variable Mortgages 'continue To Dominate Market' [print this page] Variable rates continued to dominate the UK's mortgage market throughout March, according to a new report.
A new report suggests that variable rates continued to dominate the UK's mortgage market throughout March.
According to the latest John Charcol Mortgage Index, 84 per cent of borrowers took out variable rate mortgages in March - the highest figure since October 2008. The index also revealed that just seven percent of home credit options taken out during the month were by first-time buyers.
During March, the study states that the difference between comparable variable and five-year fixed rates was around 2.5 per cent, a figure described as "monumentally different" by Drew Wotherspoon, director of marketing at the firm. However, the latest statistics indicate that fixing rather than floating is coming back into fashion in April, as this differential figure is now on the decline.
"When you look below the surface, with the large premium that borrowers have to pay for a fixed rate mortgage and the expected future movement of the bank rate, it is little surprise that variable mortgages have dominated their fixed counterparts recently," added Mr Wotherspoon.
Remortgage business also dropped in comparison to purchasing in March. During February, remortgaging was more common than purchasing, but Charcol's new study suggests that this trend has now reversed due to rising standard variable rates and the increased number of low loan-to-value rate mortgages now available.
"Purchases accounted for 52 per cent of business in March and we would expect that figure to hover around the 50 per cent mark for some time," added Wotherspoon.
However, it seems that first-time buyers are again retreating from the market, with less than one-tenth of all deals being for this group following the recession. However, Charcol states that this number "may increase gradually" over the coming months and years after the Budget announcement of a change in the stamp duty rate.
