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Popularity of variable-rate mortgages increases

By Matthew Plant - Financial specialist

21 January2010

According to mortgage broker John Charcol, 81% of all mortgages it arranged in December were variable-rate mortgages, the BBC reports.

With the Bank of England`s base rate remaining at its record low of 0.5% since March last year, many homeowners have opted to pay `relatively little` per month towards their mortgage - which according to experts, `has fended off the threat of home repossession for some`.

Remortgaging figures have remained at low levels, because many homeowners have chosen to revert to cheaper variable-rate mortgages when their fixed-rate term comes to an end.

Meanwhile, although people on variable-rate mortgages have benefited from low interest rates, some people - savers in particular - haven`t.

A mortgage expert for Think Money commented: "Although variable-rate mortgages may seem like the right choice at a time like now for many people, it is important to understand that the base rate will increase - and when it does, the cost of many mortgages will increase with it."

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Tags: mortgage, broker, variable rate

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