first direct improves capped tracker mortgage range

first direct has reduced the rates of its existing capped tracker mortgages by 20bp and add ‘Fee Free' options to the range.

In order to help consumers visualise how a Capped Tracker mortgage could be of benefit to them first direct has illustrated how its 75% LTV 2.38% +BR Capped Tracker might compare with the industry average Tracker and Fixed rates:

Assuming the Base Rate were to remain at 0.5% until the end of 2011 then rise steadily by 1.0% per year until the end of 2014, customers with a £150,000 mortgage would be £2,991 better off with first direct's Capped Tracker than the industry average Tracker (75% LTV 3.04% +BR) and £1,433 better off than with the average Fixed rate (3yr 75% LTV 4.31%).

first direct's 75% LTV ‘Fee Free' option tracks the Bank of England Base Rate plus 2.78% (currently 3.28%), but should the Base Rate rise as predicted above, customers can take comfort from the fact that their mortgage rate will never go above 4.68%.  Customers would be £1,869 better off than with the average Tracker and £310 than the average Fixed, with the added benefit of not having to pay any up-front fees.

Richard Tolchard, Senior Mortgage Product Manager at first direct commented: "Homeowners continue to be unsure whether to track or fix. With a Capped Tracker they don't have to choose - they get a low tracker rate whilst rates remain at 0.5% while having the reassurance of a cap to the rate when Base Rate rises.

"We listened to our customers and some said they prefer to pay a different rate rather than a booking fee when taking out a new mortgage.  We created the ‘Fee Free' option to do just that.