Tracker Mortgages More Popular Than Fixed Rate Mortgages As Interest Rates Remain Low

Tracker mortgages are becoming more popular than fixed rate products as borrowers believe interest rates will remain low for the foreseeable future.

Fifty one percent of borrowers arranged residential tracker mortgages during the first quarter of this year, which is the first time that this type of mortgage has over shadowed the demand for fixed rate products.

Those who were requesting fixed rate mortgages were rejecting long term deals in favour of products fixed for only two or three years, a survey by a panel of mortgage brokers has found.

Only 2% of respondents during the survey were prepared to fix their mortgage for the full term, which supports the view that borrowers are looking for flexibility in their borrowing so that they can benefit from low interest rates over the next few years.

This is a point emphasised by John Heron, Paragon Mortgages managing director who said:

“Borrowers opting for fixed-rate deals don’t want to be tied into long-term arrangements. Two-to-three year deals seem to be popular because they offer the borrower immediate security, but also the flexibility to change their mortgage in the medium term.”