Young people more likely to opt for trackers, says Uswitch study

1. People aged 18-24 are more than twice as likely to choose a tracker mortgage than any other age group
2. Those 55 or older are the most likely to have a standard variable rate mortgage
3. 25-34 year olds will be least affected by current hikes in mortgage rates, as 4 in 5 are on a fixed-rate deal
4. Claire Flynn, mortgage expert at Uswitch.com, offers advice on how to get your finances in check before applying for a new mortgage deal.

With homeowners on tracker mortgages seeing significant hikes in their monthly repayments, borrowers without the safety net of a fixed-rate mortgage may be considering moving to a new deal, according to Claire Flynn of Uswitch.com.

 However, with some experts predicting that interest rates could decrease after peaking in 2023, there is a possibility that a tracker mortgage could result in lower monthly payments, and more money saved in the long term. But do British homeowners think it’s worth the risk.

Uswitch surveyed over 2,000 UK homeowners to investigate how homeowners from different age groups were utilising the potential of tracker mortgages.

Tracker mortgages are much more popular for homeowners aged 18-24, as 17.82% took on the risk of fluctuating interest rates influencing their monthly repayments, 13.67 percentage points more than 25-34 year olds. Standard variable rate (SVR) and discounted mortgages are also much more popular for 18-24 year olds, at 25.74% and 14.85% respectively.

While fixed-rate mortgages are the most popular across all age brackets, they are utilised far less by the youngest homeowners. At least half of every other age bracket has a fixed-rate mortgage - with 4 in 5 (80.73%) of 25-34 year olds choosing this rate - but only 41.58% of 18-24 year olds opted for this deal.

At 7.47%, 45-54 year olds are the second most likely to choose tracker mortgages. While far less likely than 18-24 year olds (17.82%), 45-54 year old homeowners are twice as likely to opt for a tracker deal than 35-44 year olds, the least likely of any age group analysed (3.72%). Standard variable rate mortgages are also more popular with 45-54 year olds, as 1 in 5 (20.24%) have taken these mortgage plans. SVRs also pose potential risks, as the interest rates are dictated by the lender themselves, rather than the Bank of England.

More than 1 in 5 (6.56%) of those 55 or older have taken tracker mortgages, and the potential benefits and risks that come with it. While only 56.56% opted for a fixed-rate mortgage, they were still less likely to have tracker deals than 45-54 year olds, despite 70.84% of them having a fixed-rate plan. This is because over a third (35.66%) of those 55 or older chose a standard variable rate mortgage, the most analysed in the study and 23.70 percentage points more than 25-34 year olds.

Monthly mortgage repayments by age

On average, 18-24 year olds spend £1,390.90 a month in mortgage repayments, the highest of all age brackets. This is 59% more than 25-34 year olds, where the average monthly payment is £874.35 and the second most expensive repayment. In fact, this difference becomes greater the larger the age gap. Those 55 and older have the cheapest monthly payments, averaging just £763.79. This is 45% less than the average monthly repayments for 18-24 year olds. 

For full survey results, visit: https://www.uswitch.com/mortgages/