More borrowers are choosing to take out a variable rate mortgage as speculation mounts that there will be further interest rate cuts in 2008, research has suggested.

Spicerhaart Financial Services reported that it had seen a 133 per cent increase in the number of customers seeking a variable rate since April, with the products now making up 22 per cent of the mortgages issued in the UK.

Steve Cox, Spicerhaart Financial Services'' operations director, said: "Borrowers believed that interest rates had peaked and that they are likely to be further reduced early next year."

He added that consumers are "choosing to hedge their bets and look forward to the New Year, opting for variable products rather than locking themselves into the current higher rates".

"Consumers are clearly looking to capitalise on the competitive rates which are out there."

Speaking after the Bank of England reduced the base rate to 5.5 per cent, Sue Anderson, the head of external affairs at the Council of Mortgage Lenders, said that the rate cuts would also help return confidence to the buyers.

"It helps consumers to have an expectation that they are not looking ahead at the face of further interest rate rises," she explained.