As base rate rises from 0.5%, do you think tracker margins will reduce?

marathonic

I currently have the option of a rate of 1.79% on a lifetime tracker or 1.59% for a 2-year fix. Both are fee-free.

The fix is 0.2% cheaper initially and this will increase if base rate rises. However, I'm concerned that, if I select the fix, a tracker margin of 1.29% above BOE may not be available when the fixed period ends.

amnblog

You cannot predict the rates this lender - or any others will be offering in two years time. If this concerns you consider a longer fixed rate of 3 or 5 years.

SamDude

marathonic wrote: »

I currently have the option of a rate of 1.79% on a lifetime tracker or 1.59% for a 2-year fix. Both are fee-free.

Who are these with?

fraser

they sound like First Direct


I was thinking similar last night, if interest rates return to 'normal' circa 5% levels then I should expect it be reasonable to anticipate trackers that are far closer to the BOE.


Therefore the tracker now and the 2 year fix are not far off the same. But it comes down to you wanting / being prepared to ride gradual (or maybe more sudden) interest rate rises, vs a fix for more stability / know where you are at with payments.


if as amnblog says, you are concerned with rates beyond 2 years then a longer fix would be worth considering...


I am doing the same at the moment!

Thrugelmir

fraser wrote: »

they sound like First Direct

HSBC has access to the Asian wholesale money markets through it's business. So isn't influenced as much as other lenders by the BOE base rate. HSBC also operates a very low risk conservative lending policy. The combination enables them to offer highly competitive rates to a segment of the borrowing market.

hounslowfish

Don't forget the ERC charge with the fix. If flexibilty of overpayments, moving or changing product is important to you go with the tracker.

The tracker rates do seem to be on a downward creep but surely can't go too much lower.

samba

I got a tracker in 2007 at the peak of the pre-crash market that was just 0.18% above base rate - now I have one that is 1.49% above base rate, and have just seen 1.29% available.

I can't see it ever getting to 0.18% above base rate again, but maybe 0.99% will happen in a year or 2. If it does then I will consider remortgaging as one of the advantages of lifetime trackers is no ERCs.

pathomas22

Marathonic, who's offering a lifetime tracker at 1.79%?

The best currently on offer is First Direct's @ 2.19%...?

JimmyTheWig

I'm confused.
The title reads "As base rate rises from 0.5%, do you think tracker margins will reduce?" but then the question appears to be asking the opposite...

marathonic wrote: »

I'm concerned that, if I select the fix, a tracker margin of 1.29% above BOE may not be available when the fixed period ends.

If tracker margins reduce as the base rate rises (which seems reasonable) then it is fair to say a tracker margin of 1.29% above BOE may not be available but that would be because margins have fallen - which would be in your favour!

marathonic

JimmyTheWig wrote: »

I'm confused.
The title reads "As base rate rises from 0.5%, do you think tracker margins will reduce?" but then the question appears to be asking the opposite...

If tracker margins reduce as the base rate rises (which seems reasonable) then it is fair to say a tracker margin of 1.29% above BOE may not be available but that would be because margins have fallen - which would be in your favour!

Basically, I think that the margin will reduce but the overall rate will never again be below the current 1.79%. If this is the case, it would be a no brainer to go for the lower, fixed, rate.

However, I'm concerned that I'll be wrong and, after 2 years, the margin will actually be higher.