Borrowers who take out new deal, available at a variable rate that tracks the Bank of England base rate plus 2.49 per cent until 30/09/2013 (currently 2.99 per cent), can do so with the security of knowing that they can switch to one of the Society's rate switch fixed-rate products at any point in the future without having to pay the early redemption charge of three per cent.
If the borrower chooses not to switch, the 3 year tracker rate will change to the Society's standard variable rate, currently 4.99 per cent, for the remainder of the mortgage.
According to the Council of Mortgage Lender's latest figures, 48 per cent of borrowers took out a fixed-rate mortgage in June – the highest proportion this year.
James Wright, marketing director at Principality Building Society, said: "We recognise that the current climate coupled with conflicting economic forecasts, pose a confusing set of circumstances for borrowers. While the City predicts low interest rates for some time to come, chief economist of the Policy Exchange think tank, Andrew Lilico, recently forecast that interest rates could reach eight per cent by 2012 – a move that would see mortgage repayments soar.
"This new mortgage deal offers borrowers a competitive tracker mortgage, with the option to fix in and secure their mortgage repayments for a set term, should more evidence emerge to indicate an interest rise in the near future."
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