23
Nov
Base rate encouraged homebuyers to take out tracker loans
There has been a rise in the number of people opting for tracker
mortgages when buying houses for sale in the UK, it has been
revealed.
According to First Direct, while fixed-rate loans used to be more
popular products, homebuyers have switched their preference to
tracker mortgages.
This, it stated, is likely to be the result of the base rate, which
has kept interest rates on tracker loans low.
It reported that between 2005 and 2009, fixed-rate mortgages
accounted for 64 per cent of home loans in the UK, but this figure
has dropped to 47.6 per cent of new mortgages in 2010, according to
data from the Council of Mortgage Lenders.
First Direct's senior mortgage product manager Richard Tolchard
said: "The canny homeowner has realised that Britain has been at
the bottom of the interest rate cycle for a while and 2011 will be
the year when fixed mortgage rates start to move up."
Last month, First Direct reported an 18 per cent growth in its
share of offset mortgages, which Mr Tolchard said can help
customers earn money on their savings, as well as get a good
mortgage rate.