According to the Moneyfacts UK Mortgage Trends Treasury report, the average two-year tracker rate fell for the third month in a row in June.
In March 2018 the tracker rate reached 2.00%, whilst in June 2017 it was at 1.88%.
Charlotte Nelson, finance expert at Moneyfacts, said: “Previously, providers were opting to almost ignore the tracker sector of the mortgage market with rates and product numbers starting to stagnate. However, since competition in the fixed rate market has reached new heights, providers have started considering the variable rate sector as a new avenue in which to attract borrowers,” she added.
The finance expert at Moneyfacts pointed out that “the two-year variable tracker market is significantly smaller than its fixed counterpart, so any change, particularly with some of the best deals, can have a swift impact on the average rate”. However – she said – not only has the average rate reduced, the number of two-year tracker deals has increased, rising from 222 at the start of the year to 246 deals in June.
“Despite this small resurgence, demand for such deals is likely to be relatively low, particularly with a base rate rise looming on the horizon. However, the average two-year tracker rate is still considerably lower than the average two-year fixed rate, which stands at 2.52% this month.
“While times are uncertain it is easy to see why these comparatively low variable rates would be attractive to borrowers, particularly if they have large enough equity in their home that would ensure they’re not as affected by a rate rise if one occurred. However, any borrower considering a variable rate as an option will need to weigh up all the pros and cons before entering a deal,” she concluded.