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Halifax tracker mortgage boasts eye-catching rate

Halifax tracker mortgage boasts eye-catching rate

In recent years the fixed rate market has dominated in terms of being the product of choice for borrowers.  

With the base rate of interest at rock bottom the question has often been whether rates are likely to climb, when and by how much.  

Despite the fact that the Bank of England has nudged the base rate up a couple of times since its lowest point, it remains extremely low in historic terms. 

Fixed rates have looked increasingly sharp as competition in the market, coupled with an outlook of interest rates remaining low, has seen lenders drive mortgage rates down further.  

Variable rate deals have been something of a forgotten product, but a new product from Halifax could test whether a variable rate still has a place in the current market.

Its two-year tracker for home movers with a deposit of at least 40 per cent – pegged at 0.23 per cent above base rate, giving a current pay rate of 0.98 per cent and carrying an arrangement fee of £999.  

The rate is clearly eye-catching and crucially breaks through the 1 per cent barrier.

Of course, the initial rate should only play a part in the decision-making process for borrowers.  

The Monetary Policy Committee saw a split in the vote at the last meeting, with two members voting for a base rate cut.  

Those that think a cut is a real possibility will no doubt be attracted to a variable rate and the chance of a further fall in monthly payments.  

However, the crucial issue for any borrower to consider is how well they will cope if rates start to climb and how much spare capacity they have to deal with higher monthly payments. 

Given the political uncertainty it is hard to make any clear predictions, and the BoE has consistently stated it is ready to move in either direction.  

Ultimately that uncertainty and the extremely keen fixed rates on offer means most borrowers will stick with a safety first approach, but it is certainly nice to have some alternative, attractively priced options in the market.

David Hollingworth is associate director of communications at London & Country Mortgages