People may want to consider switching to a tracker rate mortgage as the Bank of England base rate could be in place for some time.
Peter O’Donovan, head of mortgages at Bestinvest, said that many individuals are already making the change because the price difference between fixed-rate and interest-only home loans is “quite substantial”.
He remarked: “Therefore they would rather take the risk of staying at a reasonably low rate for a longer period of time than taking the security of a fixed-rate because it is overpriced.”
According to Mr O’Donovan, with fixed-rate arrangements at over five per cent and tracker mortgages around 2.75 per cent then it is definitely worth considering one’s options.
Recent figures from the British Bankers’ Association revealed that gross mortgage lending between June and July 2009 rose by £0.3 billion.
New home loan approvals increased from 35,564 to 38,181 over the same period, up 76.7 per cent from July 2008.