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Variable rate mortgages are being chosen by many people now instead of fixed rate mortgages. In fact 55 percent of mortgages taken out in July were for variable rate mortgages.

When interest rates rise, most people feel safer with a fixed rate mortgage, but of course this can become a liability when rates start to fall. So this news about the popularity of variable rate mortgages points to the fact that an increasing number of borrowers feel that interest rates have peaked.

This confidence is being mirrored by some mortgage lenders at the moment. The Nationwide, for example, will be reducing some of its fixed rate mortgages slightly from August 23rd. Also the cost of long term inter bank loans is reducing slightly too, illustrating that the money markets are not anticipating further interest rate rises.

There are actually benefits to variable rate mortgages and perhaps more borrowers should at least consider them when chosing a mortgage.

Here are a few benefits you may not have thought of:

• No arrangement fees
• No overpayment penalties
• No lengthy early redemption periods and penalties
• Benefit instantly from falls in interest rates, (but instantly pay more when rates rise)

In a word, taking out a variable rate mortgage gives you flexibilty.

This means that you could always switch to another type of mortgage such as fixed rate or tracker if interest rates change significantly, however there may be arrangement fees and other costs associated with these types of mortgages.

Remember that you must always seek professional advice about the best mortgages for your needs and financial situation. I am just stating my opinion in this post.