Hamptons Mortgages’ March data showed that, as speculations regarding Base Rate rises become even more divided, the split between borrowers taking out fixed rate or variable rate deals last month was almost 50:50 (50.5% - fixed, 49.5% - variable).
The increase in borrowers choosing two-year variable products seen in February’s tracker contributed to levelling the field. However, it seems that this month borrowers are divided in opinion and cannot decide whether it would be best to fix their mortgage at a set rate or track the Bank of England Base Rate.
There have been split opinions amongst experts over the last three months regarding the direction of the base rate and the best options for borrowers. Whilst a further quarter point increase is expected, the decision to hold the Base Rate since January has led many commentators to believe this will be the last. In this scenario commentators have advised that variable deals, tracking just below the Base Rate, may prove a better option should the rate begin to decrease. However, with recent figures from the Council of Mortgage Lenders (CML) showing that 87% of first-time buyers took out fixed rate loans in February it appears consumers’ opinion is very much divided.
Jonathan Cornell, technical director at Hamptons Mortgages, commented: “An undecided Base Rate seemed to really put the cat among the pigeons last month, with consumers split in opinion regarding the best mortgage option.
“With the direction of the Base Rate still in the balance all that can be done is to advise borrowers to fully consider and gain advice on any mortgage deal they choose to pursue. Increasing arrangement fees may limit the saving potential of any headline rates and I strongly advise anyone to do the necessary calculations, regardless of whether they are in the variable or fixed rate camp.”
