First Direct's tracker mortgage deal 'excludes most of the market'

Date:Monday 7th September 2009
Author: Susanna Kavka

The new First Direct tracker mortgage deal looks good at first, but it will not be available to many people, according to

Hannah-Mercedes Skenfield, mortgage spokesperson at the comparison site, commented that the headline 2.79 per cent interest rate is only available on a 60 per cent loan-to-value deal, which most people cannot afford, particularly first-time buyers.

She also pointed out that the deal is directly linked to the Bank of England's base interest rate, so if the base right increases, so will the cost of monthly repayments.

"People looking for a new mortgage deal must be wary that tracker mortgages might seem cheap now, but they have the potential to become very expensive in the next few years," she said.

In order to pick a safe tracker mortgage deal, Ms Skenfield recommended calculating what the costs would be if the base interest rate increased to three or four per cent.

Last week, Ms Skenfield commented on HSBC's 1.99 per cent interest mortgage deal, calling it a "historic" rate.