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Two-year tracker mortgage rates hit all-time low – Moneyfacts
Average two-year tracker rates are now at a record low level of 1.96%, having broken through the 2% barrier for the first time, according to Moneyfacts.
The financial information provider said there has been a rush of activity from lenders repricing tracker mortgages since the Bank of England chopped rates earlier this month.
The average tracker rate now stands at 1.96%, compared to 2.02% six months ago.
Moneyfacts said it was still unclear whether borrowers would rush to take up tracker rate mortgages, with low fixed rate deals currently ‘flooding’ the market, and providing consumers with greater security and certainty.
Just yesterday, Halifax hiked all rates on its homemover and remortgage tracker rates, in a step that was described by one broker as “cynical and unwarranted”.
But Rachel Springall, finance expert at Moneyfacts.co.uk, said that the Bank Base Rate cut had led to an “impressive increase” in lenders looking to offer refreshed tracker deals to prospective customers.
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“At the same time, trackers are reaching new lows, as are fixed rates. The average two-year fix mortgage keeps edging further down, now at 2.47% versus 2.54% six months ago and 2.68% a year ago.
“Those 1.5 million borrowers sitting on a tracker mortgage may assume that their repayments will now fall, however this will entirely depend on whether their deal will apply the full 0.25% cut – some deals, such as those with Shawbrook Bank, have a collar of 0.50%.”
Borrowers taking out a two-year tracker deal based on the average rate of 1.96%, and assuming no further change to base rate, would find themselves £604.68 a year better off compared to the average two-year fixed mortgage today, and £3,598.44 better off than sitting on an average SVR of 4.78%, Moneyfacts said.
Springall added: “It needs to be said that there is a probable path for the base rate to fall further still, as the market braces itself for many months of uncertainty. Therefore, switching to a tracker mortgage could reap many rewards as customers see their repayments fall. However, borrowers must always check the full details on their offer and, if they are unsure on what type of deal to pick, seek out independent financial advice.”