From This is Money:
The new deal, which comes out today, places a ceiling on the maximum amount homeowners have to pay should costs start to rise.
Customers sign up for a tracker 2.48 percentage points above base rate for the life of the loan – giving an initial rate of 2.98%. On a typical £150,000 loan, repayments would start at £710 a month.
The rate is capped until 2012 at 4.99% – so the maximum typical repayments could rise to is £876.
• Don’t bet on fixed rates falling
Richard Morea, from broker London & Country, says: ‘If base rate rises by more than 2 percentage points, then you have the comfort of knowing that there is a ceiling on what you will pay.’
This ‘fix or track’ dilemma is one facing many borrowers. On the one hand they could stick with the tracker but risk paying more when interest rates rise; on the other they could jump on to a fixed rate and pay more now but end up paying less in the future.
But fixed rates no longer look as attractive as the…
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