Tracker mortgage customers may not pay low for long
Lenders are not making enough effort to pass on low interest rates to house buyers, it has been suggested, which could convince some people looking to buy in expensive areas to consider renting instead.
According to Click n go Mortgages, fewer people are choosing fixed-rate mortgages because taking up a tracker mortgage instead means their payments are aligned with the current 0.5 per cent base rate.
However, once this interest rate rises, customers on tracker mortgages will no longer be in control of their repayments, a concern that individuals looking for property to rent in London could avoid, with their monthly outgoings being a fixed, contractual charge.
Peter Cowell, mortgage broker at Click n go Mortgages, said if that lenders were to lower the rates of their mortgage products then there would be more first-time buyers (FTBs).
His comments came after the John Charcol Monthly Mortgage Index revealed that FTBs continue to struggle to find the money to cover the deposit for a home, which could see many people continue to rent until market conditions improve.
Written by Ben Carter
Published 28th September, 2009
© 2009 Estates IT Limited
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High-mortgage rates could impact upon tracker deal customers, which may make renting a more attractive option.