The fading prospect of an imminent interest rate hike prompted more mortgage borrowers to opt for variable rates during February than any month since November 2012, data from a mortgage broker today showed.
One in 10 homebuyers and remortgaging homeowners chose variable rates in February, up from 8.6 per cent in January and the highest percentage in over two years, according to the Mortgage Advice Bureau (Mab).
Borrowers remortgaging to a new deal were the most likely to apply for variable products in February, with 12.8 per cent doing so compared with nine per cent of homebuyers.
The popularity of variable rates peaked at 58 per cent in December 2009, nine months after the Bank of England first set the base rate at 0.5 per cent. But demand then waned over the next three years to the extent that, since December 2012, fewer than one in 10 borrowers have taken this choice.
Falling inflation prompted the Bank of England to suggest in its February 2015 Inflation Report that interest rates will not rise until spring 2016.
“Comments from the Bank of England have clearly inspired confidence that low rates are here to stay for the foreseeable future,” Brian Murphy, head of lending at Mab said.
The index separately showed mortgage product numbers hit a new post-recession high of 12,940 in February.