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Homebuyers increasingly looking to trackers

Homebuyers increasingly looking to trackers

Category: Mortgages

Updated: 04/02/2010
First Published: 04/02/2010

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Both residential and buy-to-let borrowers are increasingly opting for tracker mortgages, new research has revealed.

Over four in ten consumers (43 per cent) choosing a residential mortgage product opted for a tracker in the fourth quarter of 2009, a marked increase from the 17 per cent that did so in quarter three of last year, according to Legal & General.

The move towards tracker deals was even more pronounced in the buy-to-let sector. Almost six in ten (57 per cent) borrowers chose a tracker product, almost double the 30 per cent seen in the previous quarter.

Today's decision by the Bank of England's Monetary Policy Committee to freeze the base rate of interest at 0.5 per cent for another month at least could see the proportion of borrowers picking a tracker instead of a fixed mortgage increase further.

"There has been a distinct shift towards tracker rates, most likely because fixed rates are looking relatively expensive and because the fears of imminent bases rate rises are receding," said Stephen Smith, director of housing at Legal & General.

"Most commentators are still expecting the base rate to stay low for some time to come, so this is a golden opportunity for some people to think about paying off their debt.

"The low interest rate environment has led to a fair bit of innovation in tracker products, what with capped trackers, reverse stepped trackers and lifetime trackers all featuring recently."

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