Fixed rate mortgages are falling out favour with borrowers as the Bank of Englands base rate remains at an all time low.

Only a quarter (26.3%) of mortgages arranged in October were fixed rate products, which represents the lowest popularity of these mortgages in twelve months.

This is a rapid decline from the situation in June this year, when over 80% of all mortgages were fixed, according to the John Charcol Index, which monitors monthly mortgage activity.

Meanwhile, there was a further increase in the proportion of purchases last month to 58.5 per cent.

In addition, according to John Charcol, first-time buyer (FTB) activity showed a marked increase to 15.3 per cent, up from 10.4 per cent in September.

Drew Wotherspoon, director of communications at John Charcol, says: “With the outlook for interest rates little changed over the last month an even higher proportion of borrowers chose a variable rate mortgage, in most cases a tracker.

“The Bank of England’s announcement this month of an extension of the quantitative easing programme by a further £25bn is another indication that Bank base rate in unlikely to rise in the next few months.

“Even if longer term fixed rates don’t get much cheaper than those currently available at just under 5%, there seems a good prospect that borrowers on a variable rate will be able to benefit from rates more than 2% lower for the time being and then switch to a similarly priced fixed rate later.”