Variable and tracker mortgages are now more than twice as popular compared to just over six months ago.

According to analysis of mortgage search activity on Moneyfactscompare.co.uk, borrowers are increasingly moving towards shorter-term fixed deals as mortgage rates have risen sharply in recent weeks, and growing numbers are considering taking a gamble on the future path of interest rates with a variable or tracker rate mortgage in the hope that money markets have overblown expectations of rate rises.

Adam French, head of consumer finance at Moneyfactscompare.co.uk, said: “The economic consequences of the conflict in the Middle East have turned interest rate expectations on their head, pushing up borrowing costs and changing borrower behaviour. With fixed mortgage rates rising sharply in a short space of time, more borrowers appear willing to gamble on rates falling sooner than markets currently expect.

“Tracker and discounted variable mortgages can appear more attractive when fixed rates rise quickly, as they typically start lower. However, they also pass much more of the risk of future base rate or standard variable rate changes directly onto the borrower, rather than the lender taking on that risk through a fixed-rate product.

“There has also been a shift towards shorter-term fixed options. With five-year fixes rising by more than 70 basis points since February, many borrowers appear to be favouring two-year deals in the hope the current spike in rates proves temporary.”

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