Tracker Mortgages Still An Attractive Choice
Below is a MRR and PLR article in category Finance -> subcategory Mortgage.
Tracker Mortgages: An Attractive Option for First-Time Buyers
Summary: First-time buyers are encouraged to consider tracker mortgages, despite potential interest rate increases by year-end.
As rumors swirl about potential interest rate hikes by the end of the year, first-time homebuyers are being advised not to overlook tracker mortgages. Even though the Bank of England recently maintained interest rates at 4.5%, there is growing speculation of a quarter-point increase before 2007.
Experts at Moneysupermarket suggest that borrowers should not dismiss tracker mortgages, which fluctuate with interest rates, as fixed-rate mortgage costs have also climbed. Since August 2005, fixed-rate mortgage costs have increased by an average of 5%, despite stable borrowing rates from the bank. Moreover, larger financial market trends suggest additional price hikes are possible.
Assuming interest rates hover around 4.75% over the next couple of years, Moneysupermarket notes that homebuyers might find better deals with tracker mortgages rather than automatically choosing fixed-rate options.
Louise Cuming from Moneysupermarket advises that the choice between fixed and tracker mortgages isn't always straightforward. She emphasizes the importance of evaluating financial flexibility. If homeowners are already at their financial limit with monthly expenses, even a minor rate increase could be challenging, making a fixed-rate mortgage the safer choice.
However, for those with more financial flexibility, a tracker mortgage could be advantageous. Cuming highlights that significant interest rate hikes are unlikely in the near future, making tracker mortgages a potentially wiser option for many.
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Written by Adfero Ltd
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