The cost of the average two-year tracker mortgage has fallen for the third consecutive month, according to the latest data from Moneyfacts.
The average two-year tracker is now priced at 1.92 per cent, the lowest it has been since the base rate was raised in November 2017.
This compares to an average rate of 2 per cent the month before (March 2018), according to its UK Mortgage Trends Treasury report. However while rates have fallen in recent months, the cost of these mortgages is still higher than the 1.88 per cent borrowers paid a year ago (June 2017).
The number of tracker products has also started to edge upwards. At the start of the year there were 222 tracker mortgages, rising to 246 deals in June.
Moneyfacts financial expert Charlotte Nelson says: “Previously providers were ignoring the tracker sector of the mortgage market, with rates and product numbers starting to stagnate.
“However since competition in the fixed rate market has increased, providers have started considering the variable rate sector as a new avenue in which to attract borrowers.”
Despite more competitively-priced deals Nelson predicts that demand will remain relatively low, with the base rate predicted to rise again this year.
But she points out that the two-year tracker rate is still considerably lower than the average two-year fixed rate, which stands at 2.52 per cent in June.
“While times are uncertain it is easy to see why these comparatively low variable rates would be attractive to borrowers, particularly if they have enough equity in their home that would ensure they’re not as affected by a rate rise if one occurred.”