New mortgage deals for the undecided

The outlook for interest rates remains uncertain this week. Over the last few months an imminent rate hike has turned into a potential cut, but comments on Tuesday from the Governor of the Bank of England, suggesting that inflation is still a threat, mean that the next move is now anyone’s guess.

With all this uncertainty, this week has seen the launch of two new mortgage deals aimed at borrowers who want to keep their options open as far as rates are concerned – as well as those who simply can’t make up their mind whether to go for a fix or a variable deal.

Both new deals, from Lloyds TSB and Woolwich, offer borrowers the chance to take a tracker rate, but then switch to a fix without incurring Early Repayment Charges (ERCs) if rates start to rise.

Lloyds TSB has launched its ‘Track & Lock’ deal that tracks the Bank of England Base Rate for 5 years. – the rates start at 0.24% over Base, currently 5.99%, with a £398 fee.

Woolwich has launched a stepped tracker with an initial rate of 0.26% below Base Rate in year 1, currently 5.49%, followed by 0.39% above base. The deal has ERCs for the first 3 years.

Commenting on these deals, James Cotton, Mortgage Specialist at L& C says, “The rates on both these deals are pretty good, but borrowers should also consider what’s on offer if they decide on either a fix or a variable. If you need the security of a fix, it is best to take it now and not gamble – after all if you wait until a rate rise to switch, fixed rates could already have become more expensive.

“Borrowers must also bear in mind that if they take up the option to switch to a fix, they will only have access to that specific lender’s fixed rates, which may not be the best available at the time. In both cases, borrowers will also have to pay a new arrangement fee where applicable – Woolwich also charges a £100 rate switch fee on some deals.”