First time buyers are still being advised to seriously consider opting for a tracker mortgage, despite growing rumours of a rise in interest rates before the end of the year.
Although the Bank of England moved to hold interest rates at 4.5 per cent recently, speculation is mounting that a quarter point rise will be enacted before the start of 2007.
However, Moneysupermaket argues that those currently looking for mortgages should not automatically discount the idea of a tracker mortgage, where repayments are dependent on the interest rate, as rates have also risen in the fixed rate mortgage sector.
The cost of a fixed rate mortgage has already risen by an average of five per cent since August last year (2005), despite the bank freezing the underlying cost of borrowing. Moreover, wider influences in the financial market mean further increases are likely.
Assuming that the interest rate remains around 4.75 per cent for the next couple of years, Moneysupermarket argues that it would be silly for home buyers to automatically opt for a fixed rate mortgage, as better bargains can often be found in the tracker market.
It’s not always as clear...
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