Borrowers’ faith low interest rates will be here for the next few years is reflected in the rise of variable rate mortgage demand, seen in the first quarter of the year.
The findings emerged from feedback provided by Sesame intermediaries who reported an increase in the popularity of trackers and discount mortgages compared to fixed rate products.
Fixed-rate borrowers coming to the end of their product terms are now looking at variable rate alternatives after the anticipated rate rise, predicted to kick in at the start of this year, failed to materialise.
Senior products manager at Sesame Rob McCoy (pictured), said the two-year fixed rate was losing its shine.
“People have not seen the benefit of locking in to fixed rates because the base rate isn’t changing,” he said.
He added: “Furthermore, the low interest rate outlook remains the same…”
McCoy said discount products have become more competitive than fixes, which are affected by the swap rates market so discounts were also coming out ahead in the affordability stakes. “Discount rates are dropping so it works out cheaper in many cases,” he said.
Paul Flavin, mortgage broker and owner of Zing Mortgages, said he had received more enquiries for discount products rates since rates had started to fall but fixed rates were still ahead in popularity particularly as the looming Brexit vote cast uncertainty over whether rates would remain low.”
“We could see tracker and discount enquiries pick up if the country votes to remain within the EU,” he said.