By the end of the first three months of this year, when the base rate of interest had reached its lowest point in history of just 0.5 per cent, there was a rush of people looking to take out a fixed rate deal on their home owner loan, in order to lock into a cheap loan deal for when interest rates increased again, despite the fact that the majority of fixed rate loans were considerably more expensive than the equivalent variable rate or tracker loan.

This would have been a good move if interest rates had risen, but it now looks as though cheap loan interest rates are here to stay for some time to come and as a result of this, borrower’s ideas are shifting when it comes to choosing a new loan.

According to the latest figures form the home owner loan broker, John Charcoal, somewhere in the region of two thirds of all home owner loans taken out in September this year were on a variable rate, as fixed rate loan deals remain too expensive in comparison. This is a dramatic turn around from earlier in the year, when nearly 80 per cent of new loans were on a fixed rate basis.

Ray Boulger of John Charcoal said “Nothing has happened over the last few weeks to change our view that interest rates will remain low well into 2011 and last weeks GDP figures, showing that we are now in the longest recession since records began, supports this view. Consequently we have continued to advise the majority of our clients to take a variable rate mortgage, as the differential between fixed and variable rate pricing still means that fixed rates are discounting a quicker and larger rise in interest rates than looks likely.”