There was a sharp fall in the number of consumers shopping for tracker mortgages in August following the rise in interest rates, Experian has found.
On August 2, the Bank of England made the cost of borrowing more expensive when it raised the base rate to 0.75%, its highest level since March 2009. Just 10% of those shopping for mortgages throughout August were looking at tracker deals, down from more than a third (38%) in July.
Amir Goshtai, managing director of Experian Marketplace and Affinity, said: “The fall in searches for tracker mortgages suggests people are nervous about further rate rises, so are instead looking at fixed deals to given themselves more certainty.
“We hope that our mortgage eligibility feature will help people more quickly decide more quickly what the right mortgage is for them, particularly when so many people are still on standard variable rate mortgages and could be paying significantly less.”
Interest in fixed-term deals remains high, with 38% looking at those products, up from 36% in July. The figures suggest that the rise in base rate put-off potential home buyers from viewing a tracker deal as an attractive option for their home loan.
The research found the late rise will add around £400 a year in mortgage payments to those with on tracker and standard variable rate (SVR) deals, based on a 20-year, £250,000 loan.
In August, the company announced it would be offering mortgage eligibility to customers, giving potential home owners the opportunity to find out which mortgages they are likely to be accepted for and how much they could borrow, based on lenders’ criteria.
Meanwhile, further analysis of data from Experian found that consumers looking to get away for the summer have been looking to borrow more than £4,000 to fund their holiday.
Consumers shopping in May, June and July have been looking to borrow £4,305 on average in order to pay for their summer break.