More people turning to variable rate mortgages
Recent reports have suggested that the number of people now turning to standard variable rate mortgages is increasing, as borrowers take advantage of the sharp falls in the base interest rate. Just a couple of years ago borrowers were flocking to take out fixed rate mortgages following a series of base rate increases and amidst fears of further rate increases.
However, with the base rate having plunged and expectations of further rate cuts many are now looking towards standard variable rate deals so that they will benefit from further rate cuts.
The Nationwide Building Society has recently reported that one third of its home loan customer base, which stands at around 1.4 million in total, are now on the lender’s standard variable rate. The interest rate on the lender’s standard variable rate mortgages is set to fall to 3.5 percent as of the start of February.
An official from Lloyds TSB also said that an increasing number of its borrowers were turning to the bank’s standard variable rate mortgages, stating: ‘We have seen significant numbers of our borrowers moving on to and staying with our SVR to take advantage of how low it is at the moment.’
In the past consumers have been warned against opting for their lender’s standard variable rate mortgage deals over other mortgage deals as the interest rate on these has been far higher than other mortgage options in many cases.
However, with the base interest rate having fallen to the lowest level of the history of the Bank of England, which spans over three hundred years, and with further base rate cuts expected, many borrowers now want to try and cash in on the savings and enjoy lower rates of interest from lenders that are passing on the base rate cuts.
Related Posts
Is it time to remortgage?
Having the right mortgage is very important to most of us, as a mortgage is one of the most important, long term financial commitments that we are ever likely to make. Mortgages in the UK are typically taken out over a long period of time, such as twenty five years, and sometimes even longer, and it is inevitable that for many people their needs and circumstances will change over this long period of time. »
One hundred thousand homeowners a month benefit from low interest rates
According to a recent report around one hundred thousand homeowners every month are benefiting from the rock bottom base rate, which has stood at just 0.5 percent since April of this year. The current base rate is the lowest it has ever been in the history of the Bank of England, which spans over three hundred years. »
Continued popularity for variable rate mortgages
Whilst there was a time when people wanted to avoid variable rate mortgages because of the high rate of interest attached to them many people at the moment are finding that these are the most cost effective mortgage types to opt for because of the record low interest rate that is still in place. »
Fixed Rate or Variable Rate Mortgage
When you are looking to take out a mortgage you have to decide what sort of mortgage is going to best suit your needs. There are two types of mortgage that often prove popular amongst property purchasers, and these are variable rate and fixed rate mortgages. There are pros and cons to be considered for both of these mortgage types, and it is important to compare the pros and cons in order to determine which of these mortgage products are likely to prove suitable for your needs.»
Borrowers being pushed onto costly fixed rates by lenders
A recent report has claimed that lenders are being accused to pushing customers onto expensive fixed rate mortgage deals that could see the amount that they owe go up by thousands of pounds. »