New figures from Moneyfacts have revealed that the rate for the average two-year tracker mortgage has fallen for the third time in three months and now sits at 1.92% – the lowest since the base rate rise back in November 2017.
Moneyfacts also found that the number of two-year tracker deals has risen from 222 at the start of the year to 246 deals in June.
Charlotte Nelson, finance expert at Moneyfacts, had this to say: “The average two-year tracker rate has fallen yet again, decreasing by 0.08% since March 2018 and marking a drop of 0.02% on a monthly basis, to now stand at 1.92%. This is the third consecutive monthly reduction and is the lowest average two-year tracker rate the Moneyfacts UK Mortgage Trends Treasury Report has seen since the base rate rise in November 2017.
Previously, providers were opting to almost ignore the tracker sector of the mortgage market with rates and product numbers starting to stagnate. However, since competition in the fixed rate market has reached new heights, providers have started considering the variable rate sector as a new avenue in which to attract borrowers.
The two-year variable tracker market is significantly smaller than its fixed counterpart, so any change, particularly with some of the best deals, can have a swift impact on the average rate. However, not only has the average rate reduced, the number of two-year tracker deals has increased, rising from 222 at the start of the year to 246 deals in June.
Despite this small resurgence, demand for such deals is likely to be relatively low, particularly with a base rate rise looming on the horizon. However, the average two-year tracker rate is still considerably lower than the average two-year fixed rate, which stands at 2.52% this month.
While times are uncertain it is easy to see why these comparatively low variable rates would be attractive to borrowers, particularly if they have large enough equity in their home that would ensure they’re not as affected by a rate rise if one occurred.”