Tracker mortgages started to become very popular after the Bank of England cut the base rate to 0.5% way back in March 2009.
But in recent months, contractor mortgage lenders have been coming up with a multitude of excellent fixed rate deals to rival the trackers. The Leeds Building Society for example launched a two year fix last week at 1.99% – the same rate as the cheapest tracker.
Experts have been quick to warn borrowers looking for the security that comes with a fixed rate product that these rates will not stay as low for much longer. In the past two months, the Libor rate has risen and as this determines the rate mortgage lending institutions can borrow at, lenders are bound to pass the increase on to consumers.
Wholesale rates will also be affected by the eurozone crisis because it is having an effect on the supply of money.
As always, the best fixed rate deals are only available to people who can put down at least 25% of the purchase price as a deposit. The new Leeds deal is no exception.
For first time buyers, Chelsea Building Society has a 4.09% two year fix for those with a 10% deposit. Fees of £1,495 also need to be taken into consideration with this deal.
Meanwhile, the amount of money we spend on non-discretionary items, like mortgage repayments, food, petrol and utilities, is predicted to eat up 67.3% of our household disposable income this year, according to Oriel Securities. The economists also pointed out that spending on essentials only ate up 56.6% of disposable income ten years ago.
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