Borrower demand for tracker and discounted mortgages leaps as fixed rates fall
Fewer than half of all mortgages arranged for clients were fixed rates, down from more than 90% in September, according to mortgage brokers Rose Capital Partners.
Between October and November, the proportion of clients opting for a fix halved as variable rate mortgages increased in popularity.
More than a third of clients in November opted for trackers, and 15% opted for a discounted rate.
This compares to 8% and 1% respectively in October.
Variable rate mortgages ‘considerably cheaper’
Rose Capital said there is a big price difference between fixed and variable mortgages, with the latter being considerably cheaper.
Richard Campo, founder of Rose Capital Partners, said: “Given that some lenders are still only offering fixed rate products, it’s now more important than ever that borrowers seek professional advice from an experienced mortgage broker to ensure that they find the right loan for their circumstances.
“For so long now, it has been the trend to secure a fixed rate product, with the help of comparison and sourcing platforms, as most fixed rates were similar in structure and cost.
“But with today’s tricky market conditions and the wide variety of mortgage products that are emerging, it’s time to get back to the basics of traditional broking – taking a full background brief from clients, talking one-to-one with all types of lenders, and staying abreast of which products are coming onto the market.
“Therefore, variable rates have to be a large part of the conversation at present.”
Building societies offering competitive rates
Building societies are offering some of the most competitive mortgages at present, according to Campo.
He added: “Building societies are offering some really cheap discount rates currently, circa 3.5% vs a market average of circa 5% for a fixed rate, which is very attractive for our clients.
“They provide excellent customer service and often take a more comprehensive, longer-term view of borrowers, working with them to tackle a complex income or the odd credit blip. As brokers, we have a responsibility to consider recommending discount or tracker rates from smaller lenders rather than stick with what we know.”