Variable rate mortgages could still offer the best deal

For the foreseeable future, variable rate mortgages are likely to remain popular with first time buyers as experts suggest they may be among the best deals on offer.

Chris Parrish, group treasurer at the Yorkshire Building Society has said that the Monetary Policy Committee's decision to leave the base rate at 0.5 per cent continues to influence home-owners. He added that most economists agree that the base rate is likely to stay at the same level for quite some time.

There has been movement in mortgage rates but experts believe there will be no increase in the Bank Rate for quite some time to come. Some suggest that the Bank Rate could remain at a low for much of next year. This would point borrowers toward the cheaper variable rate mortgages on offer. Experts are recommending that borrowers with the ability to deal with a fluctuating monthly budget should review lenders variable rate products.

HSBC has cut the cost of borrowing for first-time buyers with the lowest 2 year mortgage deal available for those with a deposit of 10%. The bank is offering a 3.84% 2 year discounted variable mortgage to first-time buyers, with no fee to pay.

HSBC claim this is the only mortgage with a rate of less than 4% for first-time buyers. For the first 2 years the rate will be 0.1 per cent below the bank's standard variable rate, which is currently 3.94 per cent. After that, buyers will switch to the standard variable rate.

HSBC said their first-time buyer discounted variable rate mortgages will provide additional help to prospective buyers with smaller deposits who have been unable to find a mortgage.