Borrowers have grown confident in interest rates remaining low. This is backed by the information released by the Mortgage Advice Bureau’s National Mortgage Index. In February borrowers showed strongest demand for variable deals and did so at a level that was more than any other month in the last two years on a proportional basis. Fixed rates remained popular but 10.1% of mortgages and remortgages were for variable products.

Homeowners were choosing variable rate deals on the average more often than home buyers with 12.8% compared to 9.0%.

Brian Murphy, head of lending at Mortgage Advice Bureau, remarked, “While fixed rates remain the majority preference as people put their finances on a stable footing, it is no surprise that the lower rates available on some variable deals are attracting more interest.

“Comments from the Bank of England have clearly inspired confidence that low rates are here to stay for the foreseeable future. Some homeowners and buyers may feel there is still a window to make a short term saving through cheaper variable rates, and then lock in at a later date around the time of the first rise.”

Borrowers in London showed strongest demand for variable products at a level of 16.6%, with East Midlands at 10.0%, and 9.9% in the South East. Borrowers in Wales chose variable products at the lowest level with only 4.7% choosing variable over fixed rates.

Mr. Murphy added, “Homeowners and buyers in London often have more spending power behind them, which can give them extra confidence to seek a saving through cheaper variable deals and accept the chance that rates may rise and negate the benefits.

“Even though homeowners in Wales borrow significantly less [£85,961 for the average remortgage loan during February compared with £333,044 in London], they typically put more emphasis on the security of knowing their repayments will not change from one month to the next – even if it means paying a slightly higher price to begin with.”