Tracker Rates at their lowest for years, reports London Mortgage Broker, London Mortgage Advice Monday, 15th February 2010

Mortgage rates on tracker products are at their lowest since 1997, Bank of England figures show.
The average tracker mortgage was at 3.63 per, compared with 3.92 per cent in December,
with the base rate still at 0.5 per cent,
The lowest it has been in six years,the average two-year fixed rate deal also fell to 3.97 per cent,
Legal and General's Mortgage Purchase Index showed that borrowers are increasingly opting for tracker products.
Compared to 17 per cent in the third quarter,
in the last quarter of 2009, 43 per cent of mortgages were of the tracker variety,
"There has been a distinct shift towards tracker rates, most likely because fixed rates are looking relatively expensive and because fears of imminent base rate rises are receding,Stephen Smith, Legal and General's director of housing, said.The proportion of buy-to-let landlords remortgaging their buy-to-let deals kept on falling in Q4 2009. According to research carried out by buy-to-let lender Paragon Mortgages via its Financial Adviser Confidence Tracker (FACT), 30% of landlords in the private rental sector got a buy-to-let mortgage via a broker for remortgage purposes in Q4, down from 39% in Q3. That is the fourth quarter in a row which has seen buy-to-let remortgaging decline, and the lowest proportion since Q3 2006. There is very little incentive for buy-to-let mortgage borrowers to remortgage in the current economic conditions, as with Bank Base Rate remaining at an historic low, and lender’s Standard Variable Rates (SVRs) staying correspondingly affordable, most landlords are better off just sitting on SVR than switching to a new deal. What’s more, with most lenders having quit the buy-to-let sector there is very little competition and few products to choose from in the buy-to-let space. Figures from the Council of Mortgage Lenders (CML) support the evidence from FACT. According to the CML, the number of buy-to-let gross advances fell by 72% from 83,400 in the final quarter of 2007 to 23,700 in the third quarter of 2009, with the value of those gross advances falling from £11.3bn to £2.1bn, an 81% decrease. The number of gross advances for house purchase has halved over the period, from 32,650 to 14,460, whilst remortgage business has been harder hit, with the number of gross advances falling 78% from 37,920 to 8,420.
John Heron, Paragon Mortgages’ managing director, said:‘Buy-to-let remortgaging activity continues to decline and we can see it only going one way until competition starts to increase. "At the moment, in the majority of cases the landlord’s reversion rate is typically better than anything they can secure in the mortgage market, so there is little incentive to switch.’"However, the proportion of landlords borrowing new buy-to-let mortgages in order to buy more rental property increased substantially in Q4, with 52% of landlords arranging new finance to extend their property portfolios, up from 48% in Q3. he proportion of first-time landlords taking out buy-to-let deals through financial advisers also rose slightly, from 10% in Q3 to 16% in Q4.