Tide 'beginning to turn' on fixed-rates

The mortgage lending market is beginning to undergo a change, with borrowers turning away from fixed rates and towards discounted and tracker options, a lender has claimed.

According to GMAC-RFC, the price of short-term fixed-rate deals has been consistently increasing recently, making variable options more attractive to customers.

More than three-quarters of all mortgage loans since the beginning of the year have been fixed rates, according to the Council of Mortgage Lenders, but GMAC-RFC claims that an interest in alternatives is "inevitable" as fixed-rate levels continue to increase.

Julie Gaskin, corporate relations manager with the lender, said: "In a rate rising environment it often makes sense for borrowers to take out a fixed-rate deal, especially if a future rate rise would mean their monthly mortgage repayments will increase.

"However, the tide is now turning and fixed-rates currently on offer are higher than we have seen for several years, as they are factoring in for one or more future rate rises, making tracker and discounted deals look increasingly attractive and in many cases cheaper."

As an example, GMAC-RFC claims that a self-cert mortgage borrower could save up to £1,026 over two years if they opted for its discounted variable rate product, as opposed to a fixed-rate self-cert mortgage.

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