Variable rates continue to dominate mortgage landscape

The latest John Charcol Mortgage Index reveals that 84% of borrowers took a variable rate mortgage in March 2010, the highest figure since October 2008.  The index also revealed that just 7% of mortgages arranged were for first time buyers.

"At first glance, the difference between variable and fixed rates is nothing short of monumental.  Yet, when you look below the surface, with the large premium that borrowers have to pay for a fixed rate mortgage and the expected future movement of bank rate, it is little surprise that variable mortgages dominate their fixed counterparts," comments Drew Wotherspoon, Director of Marketing at John Charcol.

"During March the difference between comparable variable and 5 year fixed rates was around 2.5%, so the right advice for most clients was to float and not fix.  Interestingly, as we pass the half way point in April, with the differential between variable and fixed rates decreasing, our own statistics point to more fixed rates being taken out than a month ago."

First time Buyers at lowest level for a year

"The prolonged issues faced by first time buyers for a decade now are well publicized, but the economic downturn had provided a small glimmer of hope for the army of would be homeowners.  As house prices continue to rise, it seems that first timers are again disappearing from the market, with just 7% of the mortgages we arranged in March were for first time buyers.  With the stamp duty move announced in the budget perhaps this number may increase gradually, but it was hardly the panacea for a bruised and battered brigade," comments Wotherspoon.

Purchases edge ahead of remortgage again

"In February, remortgage business just snuck ahead of purchase cases, but this has reversed in March.  Purchases accounted for 52% of John Charcol's business last month and we would now expect these figures to hover around the 50% mark for some time.  This is because there are a number of factors, including rising Standard Variable Rates (SVRs) and an increased availability of mortgages with higher loan-to-values (LTVs), which mean that remortgaging is a viable option for more and more borrowers," Wotherspoon concludes.