Tracker mortgages 'increasingly popular' with first-time buyers

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Tracker mortgages 'increasingly popular' with first-time buyers

Wed 19th Mar 2008

First-time buyers are increasingly turning to tracker mortgages, according to the Council of Mortgage Lenders (CML).

Sue Anderson, a spokesperson for the association, said that although that demographic is usually attracted to the security of fixed-rate mortgages, the fact that there is currently "some anticipation that rates may fall again this year" is fuelling the demand for trackers.

She described the situation as "complex", but said borrowers opting for a tracker mortgage would benefit if the Bank of England cuts interest rates again later this year, as is expected.

Although first-time buyers are not a uniform category, Ms Anderson suggested that most of them will have a limited deposit and want to borrow a relatively high amount relative to their income, while perhaps having some uncertainty over their financial future.

They will therefore be looking for a "trade-off between flexibility and certainty, in particular with relation to interest rates".

Currently the mortgage market is being squeezed by the credit crunch, meaning borrowers are being left with fewer options - last October Moneyfacts reported that 40 per cent of mortgage products had "disappeared".

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