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Mortgage brokers - talk to me about trackers

Journalist: John Fitzsimons, Freelance

ended 23. August 2022

Morning brokers

The interest rates on fixed rate mortgages have been increasing sharply in recent months, to the point that the average five-year deal comes with a rate of above 4% according to Moneyfacts.

We are starting to hear rumblings that for some clients, a tracker deal actually represents better value now. I'd love to get your own thoughts and experiences on this one. How do tracker deals shape up for you? What's the interest like among your clients? Are there other selling points to these variable deals beyond the rates?

Or, given the economic situation, does it still make sense to opt for the certainty on offer from fixed deals?

Any and all thoughts very welcome!

2 responses from the Newspage community

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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
The difference in initial pay rates between fixed rate deals and variable rate (discounted and tracker) deals is more marked than it has been for quite some time. It wasn't that long ago that taking a fixed rate was a no-brainer for most people - a variable rate was about the same cost and had the added risk of rates increasing. However, now you can be looking at fixed rates carrying quite a premium over the equivalent variable rate, which gives cause for a pause and bit more of a conversation with clients, as it could take a number of interest rate rises before the variable rate even reaches, let alone exceeds, the equivalent fixed rate. Taking a fixed rate is no longer the cut and dry decision it once was.
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Graham Cox
Director at Bridging Hub
Tracker rates are cheaper than fixed rates. But unless you're in a very good situation financially, they are incredibly risky right now. Who knows where the base rate is going to end up in the next year. Fixed rates provide certainty your mortgage payment won't rise, which given the current economic outlook can only be a good thing.