Wednesday 23 November 2022 12:23 PM 'Tracker' mortgages fall to nearly THREE percent - £973 cheaper than fixed deals trends now
Building societies are offering new variable rate mortgages for as little as 3.39 percent with a five percent deposit as they outstrip fixed term rates in affordability following the economic turmoil in the aftermath of Liz Truss' mini-budget.
'Tracker' mortgages are quickly becoming the cheapest deals on the UK's mortgage market as leading brokers maintain fixed rates mortgages at more than six percent in reaction to the high Bank of England interest rates.
Building societies are now offering rates as low as 3.39 percent for buyers with a five percent deposit in a sign of the mortgage market settling and in preparation for fixed rate mortgages to also come down.
For higher deposit rates, deals are even better. Yorkshire building society is offering a 3.29 percent tracker rate to those with larger deposits, compared to the current average two-year fixed deal at 6.21 percent.
At a mortgage level of £400,000 this equates to a monthly saving of £973, the Telegraph reports.
Following Liz Truss and Kwasi Kwarteng's disastrous unfunded mini-budget, mortgage rates quickly spiralled to their highest level in years, with the average fixed term deal exceeding six percent.
But brokers say they are now seeing much higher demand for tracker mortgages, which rise and fall in line with the Bank of England's interest rate.
Yorkshire Building Society is offering a tracker rate of 3.49 percent for customers who can pay a 15 percent deposit, 2.13 percentage points lower than the equivalent two-year fixed rate at 5.62 percent. This would save buyers £412 per month
This is thought to be in anticipation of fixed-term mortgage rates dropping significantly over the coming weeks and months, meaning customers who take out a deal now will find themselves paying more for a longer period of time.
With uncertainty still in the market mortgage lenders are being forced to offer higher-rate fixed deals as the Bank of England's interest rates are not thought to have peaked.
But with tracker deals, this price hedging does not need to occur as rates rise and fall along the Bank's baseline automatically.
Based on a buyer purchasing a property for £400,000 and looking for a two-year deal, Skipton Building Society is offering new customers a tracker mortgage at 3.39 percent, or £2,376 per month, with just a five percent, or £20,000,
