- Get a foot on the housing ladder
- Betting on the bank
- Find the cheapest mortgages

Any fears of an imminent rise in UK interest rates have been cast aside following recent figures showing a fall in GDP for the third quarter of 2009.

Talk now is of further quantitative easing and of interest rates staying as low as they are well into 2010 at the least. Given this background, why would UK homebuyers opt now to lock into a fixed rate mortgage?

On the face of it there would seem to be little reason – most borrowers are content to stick with their lender’s variable rate rather than tie themselves to a less competitive fixed rate loan.

Ray Boulger of independent mortgage adviser John Charcol on the whole agrees that there is little motivation for borrowers to switch to fixed rate deals.

"Nothing has happened over the last few weeks to change our view that interest rates will remain low well into 2011 and last week's weak GDP figures, showing that we are now in the longest recession since records began, supports this view. Consequently we have continued to advise the majority of our clients to take a variable rate mortgage, as the differential between fixed and variable rate pricing still means that fixed rates are discounting a quicker and larger rise in interest rates than looks likely."

Whilst Boulger insists that most fixed rates still look too expensive he makes the point that the best fixed and variable rates have at least got cheaper this month.

“There is some real competition now emerging in some sectors of the market. Yesterday saw Northern Rock launch a 4.99% five-year fix up to 70% LTV with a relatively low fee of £595 for purchases (£995 for remortgages, but with a free valuation and free legals) and this new aggressive stance is helping drive some value back to the fixed rate market.” Perhaps more competitive products will encourage a greater interest in fixed rate deals going forward but as things stand this market remains incredibly sluggish.

Fixed rate mortgages continued to lose popularity in September, with variable rates now taking almost two thirds of the market. Just over a third (34.3%) of borrowers chose a fixed rate in September, the smallest proportion this year, and there is no sign of the trend changing in October, according to the John Charcol Index, the monthly mortgage activity monitor.

As for housebuying activity in general there is still concern that despite more affordable property prices, first time buyers are either reluctant or unable to take that first step on the property ladder.

According to figures from John Charcol, first time buyer activity as a percentage of total purchases remained subdued in the low double digits at 10.4%, with many potential buyers either struggling to find a deposit or failing to meet enders' onerous credit score requirements for high LTV mortgages.

In fact the first time buyer market has largely become one divided between those with parents able and willing to help and those who are not so lucky. Recent figures from the Council of Mortgage Lenders show that 80% of first time buyers now get parental help with their mortgage. For those without access to such help often the only options are either saving for many years or one of the Government's Homebuy schemes, if they qualify.

Having to save for a deposit is not actually such a bad discipline to follow, especially when you consider that many 100% mortgages put borrowers on uncompetitive rates and on loans that stretched them to breaking point.

Of course we have come full circle now and in most cases first time buyers can’t get 95% LTV deals let alone 100%. Hopeully in time lenders will allow more in the way of 95% LTV deals which should allow first time buyers to save up a more reasonable-sized deposit within a relatively short timescale. As things stand a 10% deposit (₤20k) on a ₤200,000 flat could be a bridge too far for any potential young first time buyer on a modest income.