23 Nov

Base rate encouraged homebuyers to take out tracker loans

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.ADNFCR-1222-ID-800251988-ADNFCR

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