Lenders such as Coventry, First Direct, The Mortgage Works and Woolwich from Barclays are currently offering capped mortgages.
Capped mortgages work in a similar way to variable rate deals, but have a ceiling that the mortgage rate will not increase above.
Typically mortgage rates on capped deals are 0.5% higher than the equivalent variable rate deal to pay for the security of the cap.
Michelle Slade, spokeswoman for Moneyfacts.co.uk, said: “Moneyfacts figures show a three-fold increase in the demand for new mortgages since November 2009, as borrowers become twitchy about when rates will start to rise.
“Capped rate mortgages appeal to borrowers who want to benefit from a variable rate deal when rates are falling, but worry if rates start to rise sharply.
“While capped rate mortgages are a good idea in principle, in the current market borrowers are unlikely to ever hit the cap and would likely be better off opting for a variable rate deal.
“Recent figures show the UK economy is not recovering as well as the Monetary Policy Committee would like and bank base rate is predicted to remain at its current level until next year, when it is only expected to rise very slowly.
“Borrowers opting for the variable rate deal from ING Direct at 1.90% would have to see rates rising by more than 2.49% – an increase that is highly unlikely - during the two year period for the capped deal to be a better option.
“If borrowers are concerned about the effect of rising rates on their mortgage repayments then the security of a fixed rate deal would represent a better option.”
