The data, which was released by Mortgage Advice Bureau’s National Mortgage Index show 10 per cent, opted for non- fixed rates in December, rising from last year’s 6 percent. This comes as many believe 2015 will see expectations of an interest rate rise from the Bank of England diminish.
Last month, 8 per cent of homebuyers chose variable rates, up three percent from December 2013. Fifteen percent of re-mortgaging clients similarly opted for non-fixed rates, almost doubling from 8 per cent in December 2013.
Brian Murphy, Head of Lending at Mortgage Advice Bureau said: “The surprise fall of UK inflation to 0.5 per cent in December – and the potential that low inflation may persist in 2015 – set the already slim likelihood of a Bank Rate rise back even further.”
“Uncertainties surrounding the election meant a rate rise was always unlikely for the first half of 2015, but with the MPC unanimous in keeping the 0.5 per cent rate this month, we could easily see it in place for the rest of the year.”
The Index also concluded that, on average, two year tracker rates, lowered to 2.38 per cent in December, down by 10 bps compared to November, making it the lowest figure since the Index began tracking in June 2007.
Annually the two-year tracker pricing rates have plunged down almost twice as much (60bps) as did the two-year fixed rate, which is also down by 33bps since December last year.
Records show both the two and three year fixed rates hit record lows last month, plummeting to 3.21 per cent and 3.44 per cent respectively.
Mr Murphy added: “Mortgage borrowers can therefore expect to enjoy the current low rates on the market for some time. Two year tracker and two and three year fixed rates continued to fall to record lows in December, and the competitive lending market makes it likely that rates still have room to decrease further.
“With a Bank Rate rise no longer on the immediate horizon, we have seen the popularity of fixed rate products begin to subside, as borrowers feel more confident in purchasing variable rate products.”
“Rates speculation mean the eventual rise should not come as a surprise, particularly to new homeowners whose incomes are being thoroughly stress tested for higher repayments. The Bank of England’s guidance that any increase will be gradual and at a slower pace than in previous cycles still stands true. This means there is unlikely to be much immediate impact on homeowners’ finances, and borrowers are being given plenty of time to prepare.”
Attributed to Dan Goulding
Leave a comment