Would you opt for a tracker mortgage if interest rates are set to go up in 2018?

The number of homeowners opting for a variable rate when they remortgage has plummeted 75 per cent over the past year as the Bank of England was tipped to raise interest rates - and then did.

But with the Bank having outlined that base rate should continue to climb in 2018, why would you opt for anything other than a fixed rate now?

It might seem an odd move but there are still some reasons why borrowers would take out a mortgage that could rise rather than locking into a fix.

Over the past 12 months demand for fixed rate deals surged as warnings from the Bank of England stepped up, ending with a quarter point rise in the base rate in November.

Markets and economists are pricing in at least one further 0.25 per cent rise early in 2018, which would take the official rate up to 0.75 per cent from the current level of 0.5 per cent.

According to conveyancing firm LMS, one in five homeowners looking to remortgage onto a new deal this time last year opted for a variable rate. Now, just one in 20 homeowners is choosing flexible rates with the remainder locking into fixed rate mortgages.

Nick Chadbourne, chief executive of LMS, said: 'Consumers were correct – 78 per cent of borrowers identified that a rate rise was likely, and many smartly capitalised on the situation. 

'This activity drove remortgaging volumes to peak, with the highest remortgage numbers since 2008.'

LMS’ figures show October’s remortgage market was the second busiest since the financial crisis, with 40,590 remortgage transactions and over £7billion lent.  

Longer-term fixed rate deals have become increasingly popular with demand for five-year fixed deals making up a record 50 per cent of all of October’s remortgage transactions, more than double the 19 per cent seen in the previous year.  

'As the Bank of England hints at a long stretch of rises I suspect many more consumers will opt to fix deals while rates are rock bottom,' said Chadbourne. 

you can get a mortgage through Facebook

Getting a mortgage online is becoming increasingly easy with a number of digital mortgage brokers launching over the past year - but from next month you'll be able to do the whole thing in Facebook.

Mortgage broker Nuvo has developed smart technology that uses artificial intelligence to power a chat bot that talks to you through Facebook messenger.

It asks you questions about yourself, the property and what you are looking to do - buy a new home or remortgage, for example - and in a couple of minutes it searches 50,000 mortgage products and will recommend the right one for you.

The AI bit means you can ask it questions in any format and it'll answer them - rather than guiding you through a rigid set of predetermined questions and answers.

If you get sick of texting a robot, there's also the option to pick up the phone and talk to a mortgage adviser directly.

What is Nuvo trying to do for customers?

Historically, if a customer wanted advice they would see a broker or independent financial adviser. However, recent research we conducted showed nearly 40 per cent of Britons do not, or cannot use a financial adviser, meaning that they must rely on their own research once they have received a list of prices from comparison websites.

With mortgage rates and offers changing daily, it’s a financial minefield for consumers to navigate blindly. Most people are unaware that brokers can offer them more product choice for mortgages than going direct to lenders.

In fact brokers can access 10 times the number of deals a consumer can access directly.

Nuvo provides easy and free access to a large number of mortgage products and provides advice on the best option to ensure that customers really are getting the right product, every time.

How does it work?

Customers log in to Facebook Messenger and start a conversation with the Nuvo chat bot.

A quick quote can take less than 60 seconds. We ask for a few simple pieces of information so we can understand the customer's requirements and present options back to them as quickly as possible. 

We will ask for details such as date of birth, household income, and a few questions about their circumstances such as whether they are a first-time buyer or if they will be renting the house out. 

From this information we can give a detailed list of options, tailored to each customer.

The level of information depends on what customers want from Nuvo and which product is required. 

For example, the information needed for a new mortgage or a remortgage differs slightly. For life insurance and income protection products, the information is different again. 

All communications from our website and chat bot are protected to the industry standard and latest security protocol. Customer data is stored securely in our database with managed access policies and secured backups.

Is the whole process online?

Behind the chat bot is a team with over 150 years collective experience in mortgages and they are constantly monitoring chat bot conversations. 

We pride ourselves on our team of experts who are ready to jump on a call or live chat, should a customer prefer to speak to a real person. 

We believe in the power of people just as much as the power of our advanced tech. The team will oversee all final purchases.

Nuvo is more than a chat bot; it is also a fully qualified mortgage broker. We are also qualified to advise on insurance options too, making sure the customer genuinely receives the best advice and is fully protected.