Slump in tracker take-up as borrowers flock to fix mortgage rate
Following the Bank of England’s Base Rate rise in November, the number of tracker rate products available dropped to the lowest number since September 2009, when there were 255 on offer.
According to financial information provider Moneyfacts, there are now just 268 tracker deals on the market, down from 294 a year ago.
Average tracker mortgage rates have inevitably risen since the Bank of England hiked its Base Rate to 0.5% in November. After all, they are pegged to the Base Rate and usually mirror its movements.
The average tracker rate rose from 1.93% in November 2017 to 2.15% today. It is still much lower than the 3.76% recorded in September 2009, but borrowers are drawn to the safety of the current low fixed rate mortgages available.
Charlotte Nelson, finance expert at Moneyfacts, said: “The number of tracker rate mortgages on the market has been in steady decline for some time.
“The fact that the markets are already starting to factor in multiple Base Rate rises makes the tracker rate market particularly unstable. In uncertain times providers are more likely to concentrate their efforts on fixed rates rate rather than trackers, and this is one of the main reasons for the steady decline in tracker deals.
“During uncertain times, borrowers tend to err on the side of caution; opting for a fixed rate instead of leaving themselves exposed to a potential rate rise. This lack of demand is also depleting variable products, with providers choosing to focus on fixed deals instead.”