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Mortgages - fixed and variable rates are almost identical

With a year of base rate rises and the shock impact of the credit crisis behind us, the mortgage market is in an unusual equilibrium whereby fixed and variable deals are being priced more or less the same.

The mortgage market has moved back to the state we saw 18 months ago, whereby fixed rate deals no longer come at a premium, and can sometimes cost less than a discounted deal. With increases to variable rates of late, combined with a reduction in fixed rates, there's now little difference between the cost of a fixed rate or variable rate mortgage deal.

With base rates forecast to either remain on hold at 5.75% or fall in the forthcoming months, the current mortgage market is reflecting this. Variable rate mortgages are now attractive for those people who are happy not to fix their monthly mortgage repayments and want to capitalise on any downward movements to the base rate.

Perhaps the levelling of cost between fixed and variable rates is not what Alistair Darling wants to see. His solution to housing affordability sits strongly with encouraging long term fixed deals. With the difference in cost now not even a consideration when choosing between a fixed or variable deal, it's an ideal opportunity for borrowers to choose a deal based on their individual needs and predictions of future base rate changes.

However should any external influence hit the market, particularly with a rate change, the scales will tilt and this equilibrium is sure to be short lived.

Have a look at our most recent best buy charts:

• Fixed rate mortgages
• Discounted variable rate mortgages
• Variable rate mortgages