With rates across the board continuing to drop since the surge upwards following the government’s ‘mini-budget’, 2-year fix rates are once again being seen below five percent.

In the past week lenders, including Principality, Coventry and Digital Mortgages among others have all released new 2-year fixed rate products with rates below 5 percent.

The majority of lenders are still offering 5-year fixed rates with lower interest rates than the 2-year fixed counterparts, and this is partially due to swap rates. Swap rates are rates that banks must pay which assist with their risk mitigation relating to interest rates. Higher swap rates tend to increase short-term costs for consumers.

Fixed Rate Alternatives & Standard Variable Rates

Whilst shorter term fixed rates look to become more appealing as the interest rates fall, there has been an uptick in interest surrounding Standard Variable Rates (SVR’s) and tracker rates.

Whilst lender SVR’s have been climbing, more people are beginning to consider tracker rate mortgages. Unlike a fixed rate mortgage where your payment is fixed for an initial specified period, the majority of tracker rates follow the Bank of England base rate, meaning payments can fluctuate because of changes.

Those on tracker rates over the last year would have seen their mortgage payments increase significantly. However a tracker rate mortgage can also benefit from interest rates falling. Tracker rates with an initial discounted period are typically initially more competitive than rates found on fixed products, plus they will sometimes come with no early repayment charges, offering great flexibility.

We’re here to help you

There are no guarantees with what will happen in the future, so if you are considering a tracker, you must consider the possibility that interest rates could increase and factor that into your decision making.

If your existing rate is coming to an end, or perhaps you simply want to see if there are better deals you can take advantage of, get in touch with one of our advisers today who can explore the market for suitable options with you.

Call our team on 01245 287900 or email our online expert Matt Dempsey CeMAP via m.dempsey@flagstone.onyx-sites.io to find out more about our access to lenders who are offering better deals than you might be aware of, and certainly better deals than are being reported in the media.