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Towards the end of last year and the early months of this year, many borrowers looking for a new home owner loan were moving away from the traditional fixed rate loan deal in favour of a variable or tracker rate for a cheap loan deal.

The reduction in the Bank of England base rate eighteen months ago and the prospect of loan rates remaining low for a considerable time, encouraged many individuals to take the cheaper option of a variable rate over a fixed rate loan, but the latest figures show that borrowers are now moving back towards fixed rate loan deals.

With growing uncertainty over the future of the UK economy and expert opinion divided over what is likely to happen with interest rates, more and more people are returning to the security of a fixed rate deal for their new home owner loan, in order to give them peace of mind over their loan repayments.

In March this year, 53.9 per cent of new borrowers were taking out variable rate loans, as these were significantly cheaper than the fixed rate equivalent. However, this figure has now fallen dramatically, with only 38.8 per cent of new loans being taken on a variable rate.

Apart from the uncertainty over the future movement of interest rates, many banks and building societies have recently launched far more attractive rates on their fixed rate loan products, making them more competitive against the cheap loan rates of many tracker and variable rate deals.

Brian Murphy at Mortgage Advice Bureau said “Perhaps the standout finding in July is that borrower appetite for variable rate mortgages is waning and fixed rates are now the overwhelming choice. Nationally, we have seen fixed rate mortgages among house purchase customers increase from around 45 per cent in January this year to more than 60 per cent in July.”