Consumer confusion sparked by the credit crunch and falling interest rates has led to increased uptake of lifetime tracker mortgages, research suggests.
The study, by online mortgage firm mform.co.uk, found more and more lenders are offering the tracker mortgages in response to consumer demand. These products not only offer falling rates when the Bank of England cuts the base rate, but don’t tie borrowers in.
The research shows 27 out of 90 lenders currently offer lifetime trackers, including Coventry Building Society and Lloyds TSB.
In addition, it found more than 40 of the 200 best value two-year deals are now lifetime trackers, while 64 of the best 200 five-year deals are also tracker mortgages.
Francis Ghiloni, mform.co.uk’s marketing and business development director, says: “Interest rate uncertainty and worries about lenders increasing rates on fixed and discount products has left many borrowers confused.
“The good news however is that lifetime trackers are an increasingly attractive alternative as they offer falling rates if the Bank of England cuts again but if rates don’t fall they do not tie borrowers in enabling people to switch for a relatively low cost.
“Application fees for lifetime trackers are relatively low as well which increases the flexibility of the products.
“This means that borrowers can regularly switch without significant financial penalties during the current uncertainty.”
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