Mortgage borrowers opt for trackers and discounts

Following a bumper month in June, when more than 75% of applicants bolted down to fixed mortgage rates, savvy borrowers opted instead for trackers in July, and fixed rate applications accounted for an unusually low 63% of applications.

"It shows that borrowers are fickle in their favour, and a low enough pay rate can turn heads." comments Katie Tucker, Technical Manager at Mortgageforce. "Lenders released some storming tracker and discount rates in response to the rush on fixed rates in June, because bank and building societies' own loan sheets have to have a balance between fixed rate customers and variable rate customers."

"The best deals at the moment have little or no Early Repayment Charges, because they give the flexibility of remortgaging away in the next year or so, if increasing Bank Rate does cause their payments to go up, and they want to switch to fixed rate."

What deals are out there this week?

You can access Market Harborough's discount with a current pay rate of 2.99% (that's a 2.5 discount from SVR of 5.49%) for two years:, that has no Early Repayment Charge and is available up to 75%, for an arrangement fee of £345, (Cost for comparison 5.5% APR) exclusively through Mortgageforce if you want whole of market advice; or via the lender directly.

First Direct has a 3.09% two year tracker for the term of the mortgage (that's Bank Rate + 2.59) with no Early Repayment Charge, for a fee of £999, which is available directly from the lender and with a 20% deposit. (Cost for comparison 3.1% APR).

Tucker concludes: "The risk with a tracker or discount rate is that the payments can go up if Bank rate does, but any borrowers who have calculated that they could afford the payment increases, could take advantage of some great rates now."