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Skipton pulls trackers despite broker backing for variable mortgages

Written by: Lana Clements
Skipton Building Society has withdrawn its range of base rate tracker mortgages, despite brokers saying that these deals are typically a better option in the current market.

The lender yesterday shut the door on new applications for its residential and buy-to-let base rate trackers with £1,995 fee.

Base rate trackers for existing customers have remained while limited edition two, three and five-year products have also been taken off the shelf.

The move comes as tracker mortgages have become more competitive in recent months.

Brokers not recommending fixed rates

Some brokers have revealed they are not recommending fixed products in the current rate environment.

Craig Fish, founder and director at Lodestone Mortgages and Protection, said: “I am not recommending fixed rates to anyone at present, unless they are completely risk averse, as I think there is still quite a bit of room for downwards momentum on these.

“Looking at current swap rates, lenders have still got quite a bit of margin built into these at the moment, and this can be trimmed further.

“I am expecting and hoping that fixed rates drop below 4% at some point in the New Year as lenders look to eat into their annual lending targets early. At this point, I will likely start recommending fixed rates again, but until then it’s tracker and discounted variable rates, without early repayment charges, all the way, once we have fully assessed and tailored our advice to the client’s needs.”

‘Best value is within trackers’

Lea Karasavvas, managing director at Prolific Mortgage Finance, added: “While swap rates have been reducing in the past few weeks, and we are starting to see this filter through to the fixed rate products in the market, we are very much of the opinion that the best value is within trackers right now.

“Lenders are slowly starting to build an appetite for new business, and this should drive down the cost of borrowing in terms of fixed availability in the not-too-distant future.

“But for those that need to move now or are coming off their fixed rates in the near future, we are arguably seeing better value in trackers as the price differential is so high between the two.

“We do expect fixed rates to drop further, especially as we go into 2023, but the added bonus of tracker products is that the majority of them carry no penalty for early redemption, meaning borrows can enjoy the lower tracker margins now and then look to exploit the lower fixed costs that are expected in the future.”

‘Trackers aren’t without risk’

However, Paul Neal, mortgage and equity release specialist at Missing Element Mortgage Services pointed out there is more caution needed around variable rate mortgages.

He said: “Trackers are a great tool in a broker’s arsenal but they aren’t without their risks. They move with the Bank of England base rate, although they do have a degree of wiggle room right now. On a shorter deal, you could be in for a saving, but trackers shouldn’t be approached without proper advice.”

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