Tracker mortgages rise as base rate falls

Posted: 14 Feb 2008 10:41:25 GMT

New figures show that mortgage borrowers are increasingly choosing to take out tracker-rate mortgages.

New figures show that mortgage borrowers are increasingly choosing to take out tracker-rate mortgages.

It follows the 0.25 percentage point cut to the base rate of interest in December, which estate agency Andrews said was behind a 26.6 per cent rise in the popularity of the deals.

According to figures from the firm, the increase took place between January 2007 and January 2008, with a month-on-month increase of eight per cent also recorded.

Andrews has revealed that 35 per cent of all mortgages taken out in January were tracker rates and the trend is set to continue after the Bank of England announced another base rate cut in February.

"This second fall in interest rates is a welcome respite for many borrowers who will see repayments on an average 25 year mortgage of £150,000 fall by around £45 per month since the end of last year," said Chris Chapman from the firm.

"Market confidence has been boosted by the recent base rate cuts which have had a restorative effect on the market overall as buyers become more confident the current trend for reductions will continue as the year progresses," he continued.

The base rate of interest currently stands at 5.25 per cent, a level not seen since January 2007.

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