Nationwide has noted significant changes in the UK mortgage market in the past two years.
Attractive standard variable rates have meant fewer borrowers coming to the end of fixed-rate deals have remortgaged onto a new fix, with the proportion of mortgage balances on fixed rates falling from 48% to 36% between the final quarter of 2008 and the first quarter of 2010.
In June, the typical variable rate stood at only 2.8%, compared to 5.9% in September 2008, indicating that lower mortgage rates have been helping house prices to stage the recovery seen between early 2009 and mid-2010.
The building society’s chief economist, Martin Gahbauer, also points out that lower rates have been instrumental in keeping arrears and possessions down during the recession.
While more households are now exposed to potential future increases in interest rates, the economist is expecting rates to remain at their current level until well into 2011.
Looking further ahead, Mr Gahbauer suggests: “Any increases thereafter are likely to be relatively gradual, leaving variable rate borrowers with some time to switch to fixed rates if they desire greater certainty over their monthly repayments.”
In other Nationwide news, the lender has today reported a 0.9% month-on-month fall in UK house prices in August, following on from a 0.5% decline in July.
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