First-Time Buyers Flock to Tracker Mortgages as Fixed Rates Rise

First-time homebuyers are increasingly turning to tracker mortgages as fixed rates rise, data suggests.

A total of 31.3% of first-time buyers researching mortgage options on Moneyfacts' comparison site in July were considering trackers and variable deals, compared with just 9.5% in February.

The key benefit of trackers is that they usually don't come with early repayment charges, allowing borrowers to switch away if they find a better deal.

Tracker mortgages follow the Bank of England base rate, plus a certain percentage on top. For example, someone might be given a tracker mortgage at 3.75% base rate, plus 0.3%, setting their rate at 4.05%. If the base rate rises to 4%, the tracker rate would increase to 4.3%.

The lowest two-year fixed rate for first-time buyers with a 10% deposit is currently 4.81%, making some variable rates more attractive. For instance, West Brom building society is offering a discounted variable rate of 4.49%.