Tracker mortgages ’still offer good value’

Mortgages set to track the Bank of England base rate still offer good value, despite the expectation of an imminent rate rise, according to product comparison website moneysupermarket.com.

It was today announced that interest rates are to remain at 4.5 per cent, but Louise Cuming, head of mortgages at moneysupermarket, said they were likely to rise before the end of the year.

The website states that with base rates on an upward trend many customers may respond by taking up a fixed rate offer, but encourages borrowers to take a “long-term view”.

It explains that fixed-rate mortgages have risen on average by at least 0.25 per cent since August last year, irrespective of the base rate remaining consistent.

Moneysupermarket attributes this to long-term market uncertainty pushing up swap rates, also suggesting that “it would be silly” to advise customers to immediately opt for a fixed-rate deal if base rates rise, as better value could still be found in the tracker market.

Louise Cuming, head of mortgages at moneysupermarket, said: “It’s not always as clear cut as fix or tracker.

“What people should be asking themselves is whether they are already at the top level of affordability when it comes to their monthly outgoings. If so, and if even a small rise in base rates would stretch this, then they would be wise to opt for a fixed rate.”

The analyst’s latest research shows that the best tracker on the market is around £1,164 cheaper than the best fixed-rate for a £150,000 mortgage over two years, although these figures are subject to change should base rates see an adjustment.