Mortgage borrowers should take a risk
Tue, 28 Jul 2009
Tracker Mortgages could be the way to go with base rates set to stay low....
There should always be room for a little risk in your financial diet and at the moment, choosing a tracker mortgage could be just the ticket. We think it better described as a risk as opposed to a gamble as the decision is made upon expected market conditions; obviously a tracker wouldn’t be a great idea if the rates are in their upward cycle!
With many large mortgage lenders reporting over 80% of their mortgage lending is on a fixed rate deals, it is clear people are trying to fix their monthly commitments and keep them as low as possible, fixing the rate while it holds at 0.5% (Base Rate). Savings might be better achieved using a tracker deal.
In the current market, fixed rate deals are competitively more expensive than their dynamic counterpart, the tracker mortgage. Whilst this may not come as a surprise, this should be considered in line with base rate analysts views of the rate holding at 0.5% well into next year.
Some lenders are now offering products that will allow you to track the rate for a period and fix it later, allowing borrowers to fix before the rates start to rise. Cake and eat it!