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Tempting Tracker Loans

Written By On 05/02/2014

With interest rates remaining, at least for the time being, at the historically low figure of 0.5 per cent, property owners are asking themselves which mortgage option to take in the near future.

Those that chose to stick with tracker mortgages have invariably saved small fortunes whilst the Bank of Englands base rate stayed so low.

But now with rising rates looming on the horizon, owners are in a quandary whether to stick or twist with their tracker mortgages.

The record rate has remained at 0.5 per cent for nearly five years, and while governor Mark Carney claims there will be no sudden hike in the immediate future, experts and the public alike have their reservations.

So which is best? Tracker or fixed. Five year and two year fixed mortgage loan deals have been creeping up recently, but more trackers have been appearing within the market at quite reasonable rates, mostly 2 year offers.

Therefore one needs to weigh up the pros and cons, You would need to check out any arrangement fees and add them into the equation when comparing.

If you are one of those in the very fortunate position of only paying around 1 per cent above base for your lifetime tracker at the moment, then you would need to work out if it would really be worthwhile to switch to a 2 year fixed for example.

David Hollingworth, Head of Communications at London & Country Mortgage Brokers feels that most borrowers prefer security and would probably choose a fixed loan.

However he says

Id be surprised if trackers were to make a significant resurgence but with some fixed rates drifting up a touch and tracker margins improving a touch, some may be tempted to reconsider the benefits of a base rate tracker.

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