Tracker mortgages back in vogue

Homeowners are being reminded to scour the entire product range when looking for a new mortgage, as analysis from moneysupermarket.com has shown that the average two-year tracker is looking increasingly better value.

moneysupermarket.com's weekly credit crunch monitor shows there was little to choose from between the average two-year fix and the average two-year tracker at the start of June, but that the gap between the two has increased substantially since then. As of Monday this week, there was more than half a per cent worth of clear water between the two, with the average tracker standing at 5.9 per cent, and the average fix at 6.45 per cent; the last time trackers were this low was in March this year.

Louise Cuming, head of mortgages at moneysupermarket.com, said: "In the current environment of uncertainty, it's natural to look to fixed rate deals to provide security but our data clearly shows that it's imperative to look at the whole product range when looking for a new deal. This is especially so if you can stomach a little leeway on payments. Trackers have been avoided like the plague in recent months due to interest rates looking unstable yet all the signs are that rates will be kept on hold for the time being, with the next movement potentially being a reduction. Some are even predicting rates will go as low as 4 per cent by the end of the year to kickstart the economy, in which case trackers could be a lifeline."