Decline in discounted mortgages "a good thing"

12 July 2010

Written by Steve Olejnik

Following a report by Defaqto that the number of discounted rate mortgages has decreased by 72 per cent, compared with three years ago, one expert has described the change as "a good thing".

Catherine Hearnden, director of MyMortgagesDirect, commented that many property buyers favour tracker products, as it is simpler to predict how changes in the base rate will affect their deal.

However, with the cheaper mortgages, customers may be less certain whether an alteration in interest rates will impact upon their home loan at all.

"I think discounted rate mortgages are a little bit vague anyway because no-one really knows what it is going to be discounted from," she added.

Although the number of cheaper deals has dropped, there are now 33 per cent more fixed-rate and 36 per cent more tracker products on the market than there were in 2007, the study from Defaqto showed, with banking specialist at the company David Black citing the competitive standard variable rates charged by some lenders, which reduces the incentives for them to make discount mortgages available.

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