More homeowners take variable rate 'gamble'

15/09/2009

Many British homeowners are exposing themselves to risk with their finances by sticking to variable rate mortgages, new data from Moneysupermarket.com indicates.

The financial website said that searches made by customers for fixed rate deals now account for 29 per cent of the total, down from 35 per cent in the middle of 2008.

Similarly, searches for variable rate mortgages, including tracker deals, have risen from 63 to just under 67 per cent.

The trends have partly been inspired by the fact that the Bank of England has cut its own lending rate from over five per cent to just 0.5 per cent - bringing the cost of variable rate mortgages down.

However, the Bank is certain to raise this rate at some point in the future - a process which could trap those on a variable rate who are unable to find an appropriate fixed rate deal.

This would in turn lead to higher monthly repayments and possibly an increased risk of repossession.

Hannah-Mercedes Skenfield, mortgage spokesperson at moneysupermarket.com, said: "Borrowers have become confident that the Base Rate will remain low for a while, making tracker and discounted deals more tempting."

She added: "Anyone looking for a mortgage linked to the Base Rate or Lender's SVR should assess their ability to make repayments should rates rise, and decide whether or not the gamble is worth it - at the moment our figures suggest more and more people believe it is."

Tags; Housing Debt and Bills, Young Family Finances,

Regional Debt Advice; Debt Advice Enfield,

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