24 Jan, 2008
Charcol has revealed that the three most popular mortgage products
so far in January have all been trackers with no early repayment
The brokerage says this is probably the result of expectations that
the Bank of England base rate will drop in February and the current
lack of competitive fixed rate deals.
Katie Tucker, technical manager at John Charcol, says: "The base
rate is widely expected to fall so trackers or discounts make sense
for most borrowers, and one with no tie-in at all means you can
remortgage away when you like.
"It seems that borrowers seem to be awaiting a new wave of sub-5 %
She says that two-year swap rates, which indicate banks'
predictions of the base rate in two years, and in turn set the
price for fixed rates, dropped considerably following the last
Monetary Policy Committee rate cut, but many lenders have not yet
brought down their fixed rates accordingly.
She adds that most are still making up for the high cost of lending
in the last quarter of 2007 due to the liquidity crisis.
But she says if the bas rate drops again this should encourage
lenders to drop their fixed rates.
John Charcol reveals that the few lenders that released two-year
fixed rates under 5%, such as Bristol & West and Leeds, quickly
ran out of funding and took them off the market in less than a
Tucker adds: "This merely emphasizes how vital it is for borrowers
to move fast when a good deal does come up."
John Charcol reveals that Abbey, Cheltenham and Gloucester, First
Active, Halifax and Nationwide have put their tracker rates up or
their fixed rates down, in expectation of another drop in the base