"1.5 million borrowers sitting on a tracker mortgage may assume that their repayments will now fall, however this will entirely depend on whether their deal will apply the full 0.25% cut"
The drop in Bank Rate has led to a spur in activity in the tracker mortgage market with "an impressive increase" in activity among lenders looking to offer new tracker deals.
However Moneyfacts says it is uncertain whether large numbers will flock to this deal as "the market is currently flooded with low fixed rate deals that offer borrowers more peace of mind in times of uncertainty".
The average two-year fixed mortgage is also edging further down, now at 2.47% versus 2.54% six months ago and 2.68% a year ago.
Rachel Springall, Finance Expert at Moneyfacts, said: “Those 1.5 million borrowers sitting on a tracker mortgage may assume that their repayments will now fall, however this will entirely depend on whether their deal will apply the full 0.25% cut – some deals, such as those with Shawbrook Bank, have a collar of 0.50%.
"Those taking out a two-year tracker deal based on the average rate of 1.96%, and assuming no further change to base rate, would find themselves £604.68 a year better off compared to the average two-year fixed mortgage today, and £3,598.44 better off than sitting on a SVR of 4.78%.
“It needs to be said that there is a probable path for the base rate to fall further still, as the market braces itself for many months of uncertainty. Therefore, switching to a tracker mortgage could reap many rewards as customers see their repayments fall."
