This is according to moneysupermarket.com figures which show that a borrower with a £300,000 mortgage would pay £100 a month more on an average two year fixed rate deal, than they would on an average tracker. However, with many experts predicting that Base Rates will increase this year, an increase of just 1% would reverse the situation.
If rates increase by 2%, then the payments would rise by £76 or £152 on mortgages of £150,000 and £300,000 respectively. And if the Base Rate goes back to the level it was in October 2008 (4.5%) then the increases will be a costly £260 or £520 per month respectively.
Louise Cuming, head of mortgages at moneysupermarket.com, said: "Borrowers should not be seduced by the opportunity to make short term savings by opting for a tracker mortgage deal. They must take the expected Base Rate rises into consideration right from the start, and make sure that they can still afford repayments when the Bank of England begins to reverse the cuts.
"Anyone thinking about fixing must act quickly. Lenders are increasing rates on an almost daily basis and there is a strong feeling that we have now passed the bottom of the mortgage market."
