Co-op launches lifetime tracker

Co-operative Bank has launched a lifetime tracker mortgage at 1.04% above base rate, giving a current interest rate of 6.04%.

The economic uncertainty created by the credit crisis is prompting an increasing number of borrowers to opt for fixed-rate loans, with Abbey reporting that applications for five-year fixed-rate products had doubled in the past month.

Two-year fixed rate deals had also retained their popularity with a rise of three per cent.

However, tracker mortgage rates are linked to the base rate and therefore guaranteed to come down each time the Bank of England makes a cut.

With forecasts for further reductions in the base rate this year holding steady, the Co-op’s lifetime tracker looks attractive.

The maximum loan-to-value is 90% and there are no early repayment charges, so should the base rate rise, borrowers can switch to another mortgage without paying a penalty.

There is a £699 arrangement fee for those borrowing up to £1 million and provision is made for overpayments and payment holidays. The latter can be for up to six months.

The loan is also portable, should borrowers wish to move house.

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