The average two-year tracker mortgage has broken the 2 per cent barrier for the first time, according to new data from Moneyfacts.
The recent Bank of England decision to cut base rate to 0.25 per cent is the reason for the fall in two-year trackers to 1.96 per cent.
A Moneyfacts statement says: “Whether borrowers will flock to this type of deal remains a mystery, as the market is currently flooded with low fixed rate deals that offer borrowers more peace of mind in times of uncertainty.”
Moneyfacts finance expert Rachel Springall says: “Slashing the bank base rate has led to an impressive increase in activity among lenders looking to offer new tracker deals to prospective borrowers. At the same time, trackers are reaching new lows, as are fixed rates.
“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 per cent cut – some deals, such as those with Shawbrook Bank, have a collar of 0.50 per cent.”