Tracker rates come down while fixed rates go up says report

Fixed rate mortgages are becoming more expensive while trackers are coming down in cost, new Moneyfacts data has shown.

Over the last 18 months, fixed rate deals have provided better value, but that is changing as the calculations used by banks to determine the cost of borrowing have edged up.

At the same time, a price war in the tracker market is forcing rates downwards.

The general opinion among analysts over the past nine months was that interest rates were due to come down and banks gambled that cheaper fixed rate deals would make money back once the cost of borrowing dropped.

Expectations are shifting to an increase in the base rate of interest however, dragging fixed rate deals with them.

"With continued rumblings in the market of a base rate increase later this year, consumers may be choosing now to secure a fixed rate deal, but with swap rates rising they may need to be quick before the very low rates disappear," said Lisa Taylor of Moneyfacts.

"Historically tracker-rates have been lower than their fixed-rate counterparts, primarily reflecting the added uncertainty and potential risk to the borrower, while consumers are prepared to pay a premium for the peace of mind a fixed monthly repayment provides,

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