Less than 5% of tracker rate mortgages are available on the market, which reflects the current ‘lack of appetite’ for variable rate mortgages, according to Moneyfacts.
Its UK Mortgage Trends Treasury Report revealed that there are currently only 242 tracker rate mortgages on the market, while 92% of all new advances approved during Q1 2019 were fixed rate mortgages.
Meanwhile, the two-year SWAP rate has fallen from 0.82% to 0.65% over the past month, indicating that interest rate markets have already factored in a possible Bank of England base rate cut.
This could, in turn, mean that tracker rate mortgages start to become a more viable option. However, Moneyfacts data shows that 23 products out of 242 trackers available have a rate collar – meaning that the initial rate cannot go below a predetermined floor rate.
Darren Cook, finance expert at Moneyfacts, commented: “It is unclear in which direction the next Bank of England base rate change will be going, but current futures markets indicate that it may be on the way down, so it is surprising that we see so few tracker rate mortgages currently available in the market.”
“The tracker rate sector seems to be competing against near rock bottom rates on fixed mortgage deals, and a large majority of borrowers are taking advantage of these low rates.”
He concluded: “The choice between opting for a tracker rate mortgage or a fixed rate mortgage is down to the risk appetite of the potential borrower, but with nearly 92% of advances currently being fixed, it seems that nearly all borrowers are choosing to be risk-averse during this period of economic uncertainty and favourable fixed rates,” he concluded.