Tracker Mortgages Still An Attractive Choice

First-time buyers are being encouraged to consider tracker mortgages, despite the speculation of a potential interest rate rise by the end of the year. While the Bank of England recently maintained the interest rate at 4.5%, there are predictions that a quarter-point increase could occur before 2007.

Tracker mortgages, where repayments fluctuate with interest rates, remain a viable option for prospective home buyers. This recommendation comes even as fixed-rate mortgage costs have risen by an average of 5% since August 2005, despite a stable underlying borrowing rate set by the Bank of England.

According to Money supermarket, the increasing costs in the fixed-rate sector could make tracker mortgages more attractive. If interest rates stabilize around 4.75% for the foreseeable future, buyers with some flexibility in their finances might find better value in tracker mortgages compared to fixed-rate options.

Louise Cuming of Money supermarket advises that if a small increase in interest rates would strain your monthly budget, opting for a fixed-rate mortgage might be more prudent. A fixed-rate mortgage provides stability and helps manage financial risk if rates rise.

For those who have some leeway in their budget, a tracker mortgage could be advantageous. With rates expected to remain relatively stable, trackers may offer better deals compared to fixed rates, providing potential savings.

While fixed-rate mortgages offer predictability, tracker mortgages could present better opportunities for savings, especially if interest rates are stable or rise only slightly. Buyers should evaluate their financial flexibility and consider their long-term affordability before making a decision.

Information provided by Adfero Ltd