According to a new report carried out by Legal & General Investment Management firm around 90% of all mortgages in the UK are set on a variable rate which is a much higher rate than most analysts have predicted.  In fact, many surveys show that fixed mortgages are the more popular of the two but this survey revealed otherwise.  Economist for LGIM, Tim Drayson, stated that there are only about ten percent of fixed rate deals on the market as most people thought that the market would be safe when they first secured their loans.

According to Drayson, the reason that other research has pointed otherwise is due to the fact that the researchers have not looked at the amount of people who choose to move from their fixed mortgages to variable deals was high as many fixed rate terms ended over the last decade while the mortgage rates were still low and tempting.  However, these people are now locked into variable deals that may end up hurting them since the credit crisis has made securing a new mortgage tough and the interest rates are not looking the least bit tempting to most home owners.

Drayson added that their survey took a look at the many variable borrowers who did not remortgage their loans which brought the ratio of actual fixed rate mortgages up much higher.  According to the LGIM, they believe that the FSA has not correctly tabulated the amount of people who will be affecting by the rise in mortgage rates and the amount of foreclosures that are likely going to occur as a result of deadly variable rate mortgages.  He added that cash flow and budgets are going to take a sharp hit which will in turn affect spending in the economy as well given how many homeowners are likely to get hit.