Should you take a fixed or tracker rate mortgage?

by Aaron Strutt

Aug 18 2016

There is a huge choice of fixed and tracker rate mortgages available on the market, but with so many options should borrowers lock into a fixed rate or take a cheap tracker?

The most competitively priced tracker rates are available around 1.25% and they typically have £999 arrangement fees. Some of the leading short-term fixed rate mortgages undercut the lowest tracker rates, but there is not a huge difference in price.  

Aaron Strutt, product director at Trinity Financial, says: “Since the Bank of England reduced the base rate to 0.25%, the lowest level in over 300 years, tracker rates look even better value for money. 

“To access the lowest tracker rates, borrowers typically require a 40% deposit. With a deposit of less than 15%, rates are more expensive, and fixed rates are often more competitively priced.”

Most of the lenders offer a choice of two, three, five and ten-year fixed rates, but their range of trackers is limited to two-years. A selection of banks and building societies offer term-trackers, but they are not as competitively priced.

Longer term fixed and tracker rates

If you are looking for a longer term rate and you would like payment security, it is difficult to look past the five-year fixes priced around 2.25%.

The Bank of England has already signaled that the base rate may be lowered by 0.1 or 0.2 over the coming months, so there is a chance fixed and tracker rates may get marginally cheaper.

For help to secure a fixed or tracker rate mortgage, call Trinity on 020 7016 0790.