The age of the fixed-rate mortgage passes

For the last two years fixed-rate mortgages have been the top choice for homeowners looking to buy a house or get a cheap deal on their home loan.

But new figures show that with interest rates now far higher and many people thinking they will come down in the years to come, people looking for a new mortgage are moving away from fixed-rate deals.

"In a rate rising environment it often makes sense for borrowers to take out a fixed-rate deal, especially if a future rate rise would mean their monthly mortgage repayments will increase, and this has certainly been the mantra of many a mortgage expert over the last few years," said Julie Gaskin, corporate relations manager at mortgage lender GMAC-RFC.

"However, the tide is now turning, and fixed-rates currently on offer are higher than we have seen for several years, making tracker and discounted deals look increasingly attractive, and in many cases cheaper."

The gap between fixed and discounted (or tracker) mortgages has widened recently, with few fixed-rate deals now available under six per cent and some closing in on seven per cent. Tracker or discount mortgages are generally at least 0.5 percentage points cheaper and some major lenders are offering deals under 5.5 per cent.

Council of Mortgage Lenders (CML) figures show since the start of 2007 more than three quarters of all mortgages have been taken out on fixed-rate deals.

However, with current fixed-rate deals already priced high to take account for another rise in interest rates appetite for other deals is likely.

"Now is the time . . . to harness the change and look towards tracker and discounted products to drive business growth as demand for this type of product will inevitably increase in the foreseeable future," Ms Gaskin said.

"Those that shy away from this may be missing a trick with consumer hungry for a good deal."