Fixed rate mortgages have seen their popularity fall significantly since the Bank of England's shock rate cut last month, new research suggests.
Borrowers are increasingly moving to tracker mortgages, hoping to make savings in the future as interest rates fall, according to Spicerhaart Financial Services.
Spicerhaart’s latest mortgage survey also found first time buyers are beginning to re-enter the market as house prices have fallen.
With the Bank of England hotly tipped to make a further cut in base rates tomorrow, and with further cuts on the horizon, borrowers are looking to benefit by switching to a tracker mortgage.
Spicerhaart’s survey suggests the number of homeowners opting for tracker mortgages increased by 12.5% during October.
Fixed rates declined in popularity, down 11%, as borrowers hope interest rates will continue to fall as the Bank of England attempts to combat the economic downturn.
Steve Cox, operations director at Spicerhaart, says: “There has been a rush of borrowers to secure the remaining competitive trackers available. If the base rate is cut again on Thursday, which is very likely, these borrowers will reap the rewards.”
However, Cox says borrowers should quickly move to snap-up existing tracker deals, and many lenders have raised tracker rates for new borrowers following the Bank of England’s cuts.
Today, Abbey confirmed it would be raising rates on all tracker products by 0.5% as it anticipates a half-point reduction in base rates tomorrow.
Spicerhaart also found first time buyers are taking tentative steps into the housing market again as falling house prices improve affordability.
Over the past four months, the number of first time buyers earning less than £40,000 has increased by 16%.
Spicerhaart says the bottom end of the market has become particularly affordable, helping first time homeowners step onto the housing ladder.
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