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.

The base rate has been at an all time low of just 0.5 percent for the past ten months, and as such many of the more favourable deals from lenders are the standard variable rate mortgages.

According to reports the popularity of standard variable rate mortgages is continuing to grow, as lenders are offering some very competitive deals as a result of the low base interest rate. John Charcol, the mortgage broker, released figures recently showing that over 80 percent of the mortgages that it arranged in December of last year were variable rate mortgage deals. With many economists predicting that the base rate could remain at this low level for some time to come the popularity of variable rate deals could continue to grow.

The low interest rates on variable mortgages have also affected remortgaging levels, and this is because many of the borrowers that were on special mortgage deals, such as fixed rate mortgage deals, for a period of time are simply allowing their mortgage to revert to the standard variable rate with their lender rather than finding another fixed rate deal or a different deal.

A spokesperson from John Charcol stated: “With the average difference between the fixed rates and the initial rate on the best trackers around 1.5% in favour of trackers, it will currently take a substantial rise in Bank rate for a borrower who takes a tracker to be worse off than one who opts for a fixed rate.”

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