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| Version 3 | Version 4 |
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| Tracker mortgages: a better deal than ever? | Tracker mortgages: a better deal than ever? |
| (12 days later) | |
| With figures this week showing Britain has plunged into its first double-dip recession since the mid-1970s, some economists believe an interest rate rise is receding ever further into the distance. If you subscribe to that view, then base rate tracker mortgages are looking like a better bet than ever. | With figures this week showing Britain has plunged into its first double-dip recession since the mid-1970s, some economists believe an interest rate rise is receding ever further into the distance. If you subscribe to that view, then base rate tracker mortgages are looking like a better bet than ever. |
| The City sees no prospect of the Bank of England base rate being raised from its record low of 0.5% before the end of 2013 at the earliest. | The City sees no prospect of the Bank of England base rate being raised from its record low of 0.5% before the end of 2013 at the earliest. |
| Ray Boulger at mortgage broker John Charcol says: "My view is that the timeframe for the bank rate remaining at 0.5% is being extended all the time." | Ray Boulger at mortgage broker John Charcol says: "My view is that the timeframe for the bank rate remaining at 0.5% is being extended all the time." |
| He thinks we are looking at base rate remaining at its current level "beyond 2014". | He thinks we are looking at base rate remaining at its current level "beyond 2014". |
| If you are looking for a new mortgage, it arguably comes down to a choice between a base rate tracker or a five-year fixed rate. If the economists are right, there's probably not much point going for a two-year fix, because you will be coming to the end of your deal just as rates may start to rise. | If you are looking for a new mortgage, it arguably comes down to a choice between a base rate tracker or a five-year fixed rate. If the economists are right, there's probably not much point going for a two-year fix, because you will be coming to the end of your deal just as rates may start to rise. |
| The cheapest lifetime trackers are offered by Bank of China's UK arm and HSBC. With the former, you pay bank base rate plus 2.3% (ie, 2.8% now), and with the latter it is base rate plus 2.29% (2.79% now). The Bank of China deal is available up to 80% loan-to-value (LTV) for properties worth up to £150,000, up to 75% LTV for homes worth £150,000 to £500,000, and up to 70% LTV above that. There is an arrangement fee of typically £1,295. HSBC will only lend up to 60% of the value; however, there is no fee. | The cheapest lifetime trackers are offered by Bank of China's UK arm and HSBC. With the former, you pay bank base rate plus 2.3% (ie, 2.8% now), and with the latter it is base rate plus 2.29% (2.79% now). The Bank of China deal is available up to 80% loan-to-value (LTV) for properties worth up to £150,000, up to 75% LTV for homes worth £150,000 to £500,000, and up to 70% LTV above that. There is an arrangement fee of typically £1,295. HSBC will only lend up to 60% of the value; however, there is no fee. |
| You will pay a premium of roughly 0.75% for the protection offered by a five-year fix as opposed to a lifetime tracker, but a lot of people will feel that is a price worth paying for five years' security, says Boulger. If you can't afford to get the interest-rate guessing game wrong and/or you don't want to live with the fear of rates rising, fixing may be the way to go. | You will pay a premium of roughly 0.75% for the protection offered by a five-year fix as opposed to a lifetime tracker, but a lot of people will feel that is a price worth paying for five years' security, says Boulger. If you can't afford to get the interest-rate guessing game wrong and/or you don't want to live with the fear of rates rising, fixing may be the way to go. |
| The cheapest five-year fixed rate at the time of writing was 3.59%. This is offered by both the Post Office and Chelsea building society. However, while the Post Office will lend up to 75% of the property's value, the Chelsea will only go up to 70%. Both deals carry a £1,495 arrangement fee. | The cheapest five-year fixed rate at the time of writing was 3.59%. This is offered by both the Post Office and Chelsea building society. However, while the Post Office will lend up to 75% of the property's value, the Chelsea will only go up to 70%. Both deals carry a £1,495 arrangement fee. |
| Top mortgages | Top mortgages |
| Chelsea Building Society | Chelsea Building Society |
| Yorkshire BS | |
| Nationwide | Nationwide |
| Provided by London & Country for the Guardian | Provided by London & Country for the Guardian |