The number of tracker rate mortgages, which move up and down in line with the Bank of England’s bank base rate, available to borrowers has plummeted to a nine-year low.
Data from financial information site Moneyfacts has revealed that there are currently 268 trackers on offer from mortgage lenders. This is a significant decline from the 294 on offer a year ago, and the lowest total since September 2009 when borrowers had just 255 deals to choose from.
While the numbers on offer have dropped in the last 12 months, the rates charged have increased. The average rate today is 2.15%, compared to the typical rate of 2.08% last February.
Charlotte Nelson, finance expert at Moneyfacts, suggested that the market is in a similar position today to that of 2009, with mortgage lenders unsure how to price their variable rates and so opting to withdraw them altogether.
She added that talk of multiple base rate rises this year has only added to the uncertainty, with SWAP rates rising again.
Nelson continued: “The fact that the markets are already starting to factor in multiple base rate rises makes the tracker rate market particularly unstable. In uncertain times providers are more likely to concentrate their efforts on fixed rates rate rather than trackers, and this is one of the main reasons for the steady decline in tracker deals.
“During uncertain times, borrowers tend to err on the side of caution; opting for a fixed rate instead of leaving themselves exposed to a potential rate rise. This lack of demand is also depleting variable products, with providers choosing to focus on fixed deals instead. Providers also prefer stability in uncertain times, to avoid losing customers in their mortgage books.
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