Mortgage News
Medium-term trackers trump fixed rates as costs fall
Borrowers taking a gamble on the Bank of England’s base rate remaining low by opting for a medium-term tracker can access rates 10% lower than those available at the start of the year.
Analysis of Mortgage Brain’s product data revealed that the best performing mortgage was a 90% loan-to-value (LTV) five-year tracker, which, following the 10% rate drop since January, is now priced at 2.65%.
In financial terms, the 10% cost reduction equates to a potential £972 annualised saving on a £150,000 mortgage when compared to this time last year.
By comparison, the lowest priced 90% five-year fix and two-year tracker both cost 1% less than they did three months ago.
The lowest rate five-year tracker with a 60% LTV, which currently stands at 1.99%, has seen no change in cost over the past three months. But over the past 12 months the product has fallen in price by 12% offering a potential £1,098 annualised saving on a £150,000 mortgage.
Mark Lofthouse, CEO of Mortgage Brain, said: “Our latest data, coupled with recent predictions that possible base rate rises are not likely until 2017, or even 2018, will be further welcome news to a lot of today’s potential homebuyers or those looking to remortgage.”
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The cost of the lowest rate two-year fixed product for buy to lets with an 80% LTV, is now 5% less than it was in January 2016.
The cheapest five-year fixed at 3.99% and 80% LTV costs 4% less than it did three months ago, producing a saving of £39 per month or £468 on a £150,000 mortgage when compared to April 2015.