The news comes after research conducted by John Charcol indicates that all of the variable rate deals with interest of at least half a percentage point below the Bank of England's base rate were withdrawn over the course of last week. Meanwhile, the majority of fixed-rate products on a two-year contract are said to be staying level around the 6.3 per cent mark, some 0.55 percentage points above the current 5.75 per cent base rate set by the Bank of England's monetary policy committee.



As a result, Drew Wotherspoon, marketing and communications director for the financial services firm, stated that the cost gap between the two types of borrowing has "shrunk" so much that consumers are now left with the choice of either opting for a secured loan which offers a low rate of interest but large fees or one with lesser attached costs but higher interest rates to pay.

Although he suggested that fixed-rate deals can offer homeowners payment "security", Mr Wotherspoon claimed that variable rate loans could be a "better value" option. He said: "We do not anticipate bank rate rising beyond six per cent and even that is up for debate after reading the latest set of minutes from the monetary policy committee which recognise that most of the impact is still to be felt from the recent run of rises. We also believe that rates are likely to fall back in the second half of next year, so variables look to offer better value over a two-year period."

Despite his claims, Mr Wotherspoon warned that choosing the right secured loan product "is far from an exact science". Pointing to variables such as the size of mortgage consumers are wishing to take out, he suggested that taking the time to get the correct financial advice is "clearly key" for borrowers.

Meanwhile, figures recently released by the Motley Fool have claimed that mortgage provider Halifax has used the Bank of England's historically low base rate over recent years as 'a sly ruse' to steadily raise interest rates on its standard variable rate (SVR) products and so increase the pressure on homeowners to make secured home loan repayments. During the mid 90s, the Yorkshire-based lender was reported to have kept interest on its SVR deals "at much lower levels" than the Bank's rate. However, following the base interest rate reaching a 58-year low in 2003 Halifax was said to have maintained its own interest at some two percentage points above official figures.

David Kuo, head of personal finance for the firm, claimed that other major mortgage lenders are likely to follow Halifax's lead. He said: "Although the data is just a snapshot of interest rates over the past 12 years, the trend is clear. If we want to avoid getting stung by sly tactics like these, the simple answer is to opt for a home loan which isn't directly linked to a lender's SVR, such as a tracker or fixed-rate mortgage."