Borrowers opt for variable rates

Mortgage borrowers have been very canny in the type of loans they have taken out in recent months, according to Spicerhaart Financial Services.

The firm has published research revealing that there was a rise in the number of people taking out a variable-rate mortgage in December 2007.

It means that these borrowers will benefit from cuts to the base rate of interest, which many analysts believe will be plentiful in the year ahead.

"Consumers rightly predicted that interest rates were set to fall, and switched to variable products accordingly. Though the Bank of England did not drop the base rate… [in January] it is clear that borrowers believe another cut, to match the 0.25 per cent in December, is imminent," said Steve Cox, operations director at Spicerhaart.

"The huge increase in tracker products across the year signifies the change in the market, and we expect this figure to increase further into 2008.

"It is highly unlikely that interest rates will rise this year, so people are choosing to capitalise on this and ride out 2008, rather than lock themselves into anything," he continued.

According to the firm, since December 2006 there has been a 350 per cent increase in the number of people taking out variable-rate mortgages.

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