Variable-rate mortgage holders 'currently better off'

Date:Tuesday 13th October 2009
Author: Susannah Kavka

People who are on variable-rate mortgage deals are currently receiving a more competitive rate of interest in the short term so that they are not tempted to remortgage their property, an industry insider has suggested.

Peter O'Donovan, head of mortgages at Bestinvest, made his comments following the release of August lending figures from the Council of Mortgage Lenders, which indicated that remortgages have declined 57 per cent year on year.

Mr Donovan put the results down to the fact that fixed-rate mortgages are generally one or two per cent higher than variable interest rate deals, so people are not planning to switch.

As well as this, he pointed out that there is a feeling in the market that the base interest rate will not be increasing for a while, which he suggested could mean that variable interest rates stay low.

"Probably in the short-term, [for] a two-year deal it is probably better off staying where they are on those low variable rates," he added.