Mortgage hunters who can afford to take a risk could save themselves a packet by choosing a tracker mortgage.
The average rate on a two year tracker is now 5.9%, or 0.55% lower than the average two year fixed rate deal (6.45%).
This means a homeowner borrowing £150,000 could save around £610 on their annual mortgage repayments by opting for a tracker deal.
No reward without risk
The downside is that you would be exposed to the market at a particularly volatile time - this is why banks are charging such a high premium for the security of a fixed rate deal.
As an indication of just how uncertain things are at the moment, the Bank of England's monetary policy committee was split three ways when it voted on the base rate this month. So, no one really knows what the rate will be like two months from now, let alone two years.
Of course rates could fall significantly and save you even more money (indeed some analysts are predicting the base rate could drop as low as 4%), but it could just as easily turn around and do the opposite.
Is a tracker mortgage for you?
The best mortgage for you will depend on your financial situation.
If you are certain you could afford it if the base rate jumped dramatically at some point in next two years, banking on the tracker could save you a packet.
However, if such a rise would spell financial ruin, you’re better off going for another fix. It may be pricier, but at least you won’t be risking your house.
