Tracker Mortgages To Become Extinct?
Tracker mortgages could be facing extinction according to recent figures from a price comparison website.
The website revealed that despite recent claims of ‘green shoots’ in the housing market, the number of mortgage products available has plummeted
With the number of fixed rate mortgages falling by 46 per cent since July last year, tracker mortgages have proven to be the worst hit.
The tracker mortgage market has witnessed the number of available tracker products plunging by 81 per cent since July 2008 with the number of one year tracker products falling by 99.6 per cent from 522 on July 1st 2008, to just two today.
Lenders drop trackers
The number of two and three year tracker deals available has fallen by 74 per cent and 73 per cent respectively, over the same period.
Louise Cuming, the head of mortgages at the price comparision, website stated that four out of five tracker deals have disappeared within just 12-18 months.
She said: “The fall in tracker mortgages highlights how the last 12 to 18 months have seen a complete meltdown in the mortgage market. The figures show that four out of five tracker products available 12 months ago, when the Base Rate was at five per cent, have disappeared.
“Whilst it may not be surprising to see lenders pulling these products, it is a stark reminder that lenders call the tune and competition is no longer the name of the game. The flight of borrowers to fixed rates has definitely been precipitated by lenders who have decimated the choice of tracker rate alternatives.”
She stated that the figures could be the result of the ongoing reductions in the base rate.
She said: “Banks which had large number of tracker mortgages on their books have had their fingers burnt by the dramatic fall in the Base Rate. It isn’t surprising that they are now a little unwilling to get back into that market, especially with the Base Rate remaining so low.”
Tracker rates could become ‘very expensive’
“At the same time, customers may be concerned that a tracker mortgage at 2.5 per cent above the Base Rate could quickly become very expensive.”
The spokesperson raised concerns about the “lack of choice” within the mortgage market staking that “Fixed rates, tracker rates and SVR products all have a place to meet individual needs which are all different. Now more than ever there cannot be a ‘one size fits all’ solution to increasingly complex needs.
“Unfortunately, given the low appetite for volume lending, providers no longer have the competitive drive to deliver choice. In the end, this means borrowers suffer.”
She advised those looking for a new mortgage, that “the near entire absence of tracker products shouldn’t put you off looking around for them; the trackers that are still available are generally much cheaper than the equivalent fixed rate deals.”
She added: “The decision between a tracker and a fixed rate is always somewhat of a gamble, and whilst some people like the certainty a fixed rate mortgage affords, the savings on offer from tracker mortgages are hard to ignore.
Almost everyone agrees that the Base Rate must eventually rise, but no one knows quite when this will happen, and if rates remain flat for another six months or so, those opting for tracker may save hundreds of pounds.”
Legal and financial writer
Article Source:http://www.articlesbase.com/mortgage-articles/tracker-mortgages-to-become-extinct-1101523.html
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