Tracker mortgage rates drop to historic low
Tuesday, 8 March 2011 3:10 PM
The rates on tracker mortgages have fallen to their lowest level ever, according to new research.
Figures released by Moneyfacts.co.uk show that the average rate on a two-year tracker deal has fallen to 3.4 per cent, the most attractive amount since the site started monitoring rates in 1988.
In the past month, a number of mortgage lenders, including Nationwide, Northern Rock and Santander, have moved to reduce rates on their base rate tracker loans.
Meanwhile, the average rate on a two-year fixed-rate mortgage has increased to 4.59 per cent – its highest level for ten months.
Michelle Slade, spokesperson for Moneyfacts.co.uk, said that some UK borrowers had adopted a "wait-and-see approach" in recent times, preferring to stick with a standard variable rate (SVR) rather than move to more expensive mortgage deals.
"However, talk of an imminent base rate rise has caused a surge in the demand for new mortgage deals," she added.
"Lenders appear to be trying to tempt borrowers off record low SVRs on to new tracker deals instead.
"Rates on tracker deals continue to be more competitive than fixed-rate deals, but borrowers need to ensure they factor in the effect of any base rate rises on their monthly repayment when considering a new deal.
"Borrowers looking for a fixed-rate mortgage need to act fast as deals are only in the market for an average of two weeks," she advised.
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