Almost one in three first-time buyers (FTBs) were considering variable or tracker mortgages in July as rising fixed-rate borrowing costs prompted more prospective homeowners to explore cheaper alternatives, according to analysis by Moneyfacts.

The proportion of FTBs researching tracker or variable mortgages jumped to 31.3% in July from just 9.5% in February, having remained below 10% throughout the spring before increasing as fixed mortgage rates climbed.

The shift coincided with a rise in the average new two-year fixed mortgage rate at 90% LTV, which increased from 5.09% in February to 5.74% in July, according to Moneyfacts.

For a FTB borrowing £200,000 over 25 years, monthly repayments rose from around £1,180 to £1,257. Although rates have eased from their April peak, borrowers are still paying around £924 more a year than they would have in February.

By comparison, the average new two-year 90% LTV tracker mortgage rate stood at 4.80% in July.

On the same £200,000 loan, this would result in monthly repayments of around £1,146, offering a saving of approximately £111 a month, or more than £1,300 a year, compared with the equivalent fixed-rate mortgage.

Adam French, head of consumer finance at Moneyfactscompare, said the sharp increase in searches for tracker mortgages reflected the financial pressure higher fixed rates were placing on aspiring homeowners.

French said: "For many borrowers, saving more than £100 a month compared with a fixed-rate deal could make the difference between being able to buy a home or delaying their plans.

"Right now, many tracker mortgages look attractive because they are priced at around one percentage point above the Base Rate, making them noticeably cheaper than equivalent fixed-rate products. However, borrowers need to remember that today's monthly payment is not guaranteed to last. The right choice ultimately depends on individual circumstances, but anyone stretching themselves to get onto the property ladder should carefully consider whether they can still afford their mortgage payments if interest rates move higher."

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