Tracker mortgages offer good value for money

Permalink: Tracker mortgages offer good value for money
by Kay Murchie

Moneysupermarket.com, the finance price comparison website, has found that tracker mortgages, which track the Bank of England’s base rate, are making a comeback and look good value for money.

Research from moneysupermarket found that the gap in cost between a two-year tracker mortgage and a two-year fixed-rate mortgage has widened in favour of a tracker deal which is currently at an average of 5.9% compared to 6.45% for a two-year fixed-rate.

moneysupermarket.com’s weekly credit crunch monitor showed there was little difference between the two mortgages at the beginning of last month, However, there is now a 0.5% gap, making the tracker deal much cheaper and increasingly good value.

The cost of an average tracker mortgage is now at its cheapest level since March this year and money supermarket is reminding consumers to scour the market for the best mortgage deals.

Commenting on the findings, Louise Cuming, head of mortgages at moneysupermarket, said it is understandable that consumers will turn to fixed-rate deals in the current economic climate of uncertainty. However, our data shows that it is essential that consumers look at all mortgages on offer when looking for a new deal.

With the instability in interest rates, tracker mortgages have been avoided but economists believe rates will remain on hold for the short-term with a reduction in the medium-term, added Ms Cuming.

If interest rates are cut, as widely expected by the end of the year, tracker mortgages could be a lifeline, concluded Ms Cuming.