Tracker mortgages now account for almost two thirds of business going through mortgage broker John Charcol.
Fixed rate mortgages have continued to fall out of favour with borrowers, who are looking to cash in on record low interest rates, driving tracker mortgages to take the majority of mortgage lending in September at John Charcol.
September saw the smallest proportion of borrowers choose a fixed rate mortgage this year, representing just 34.3 per cent of the market in comparison, and John Charcol’s monthly mortgage activity monitor for October paints a similar picture for this month.
Furthermore, Ray Boulger, spokesperson for John Charcol, is in agreement with the many other market analysts who predict that interest rates will stay low into 2010, encouraging more people to opt for variable rate mortgages.
As a result of low interest rates, combined with the latest GDP figures which show that the UK is now in the longest recession since records began, Mr Boulger said: "Consequently we have continued to advise the majority of our clients to take a variable rate mortgage, as the differential between fixed and variable rate pricing still means that fixed rates are discounting a quicker and larger rise in interest rates than looks likely."
First time buyer mortgage activity remained subdued, the figures show, representing just 10.4 per cent of lending at John Charcol, while they struggle to find a big enough deposit and meet lenders' credit score criteria.
Tighter lending conditions and higher deposit requirements have split the market, Mr Boulger explained, between those who can borrow from their parents and those who do not have this option.
The availability of 100 per cent mortgages until last year would have dissuaded many from saving because they did not think they would have to, he added.
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