Fixed Cheaper than Tracker - Decisions, decisions

marathonic

I recently moved to First Direct to their 1.29% + BOE lifetime tracker - currently 1.79%.

As of this morning, this has moved to 1.49% + BOE - currently 1.99%.

However, they've introduced the following fixed rates, which are fee-free for existing customers:

2-year: 1.49%
3-year: 1.89%
5-year: 2.29%

I'm really tempted by some of these.

I realize that the lifetime tracker is a good rate but am of the opinion that the margins will be similar, or perhaps lower, when the base rate starts to rise.

My mortgage is less than 2.5 times my salary so is well affordable and I could afford to save about a 20% overpayment over 2 years. With this in mind, I'm tempted to go for the two year product, save in regular savings accounts and high rate current accounts and, in 2-years, bring my mortgage down to a good bit less than 2 times my salary.

Has anyone any thoughts? Would you just stick it out with the tracker - which is currently 0.3% more expensive, getting more expensive as base rate rises between now and 2017.

silvercar

I recently moved to First Direct to their 1.29% + BOE lifetime tracker - currently 1.79%.

As of this morning, this has moved to 1.49% + BOE - currently 1.99%.

I'm curious how a life time tracker can move when the BoE rate hasn't moved.

marathonic

silvercar wrote: »

I'm curious how a life time tracker can move when the BoE rate hasn't moved.

Sorry, I didn't explain properly - they have increased the margin they charge for new applicants. I'm still on 1.79%.