It targets borrowers who want something cheaper than traditional fixed-rate loans
TAB has launched a new type of bridging loan called TAB Tracker that links to the Bank of England’s base rate, plus a margin.
TAB margin starts from 6.8% over base, working out at rates from 7.8% pa, or 0.65% pcm. The base rate currently sits at 1%, following an increase earlier this month.
The product has been developed for borrowers who are planning a quick sale, want to take advantage of a cheaper interest rate, or don’t expect rates to rise during their term.
Duncan Kreeger (pictured), chief executive and founder of TAB, noted that in the residential property market, fixed-rate mortgages are more expensive than tracker rate mortgages.
He said that with a fixed-rate loan, the borrower is paying more for the security of knowing what their interest rate will be for the duration of the deal.
“Now we’re introducing the TAB Tracker, which will be cheaper than traditional fixed-rate loans. This new product allows us to sharpen our pricing and keep rates as low as possible while other lenders may speculatively and arbitrarily raise fixed rates to protect themselves against base rate rises,” Kreeger said.
“If borrowers are confident they can cover the payments if the bank rate rises, the TAB Tracker may appeal to them. It’s a bold, radical reform - and I don’t think anyone else is making the effort to innovate like this and help their customers. We’ve also taken the decision to quote the interest on our loans annually – we like to be transparent as well as innovative,” he continued.
“TAB is leading the way, but others will follow,” said Kreeger, who also confirmed that the bridging lender’s existing 12-month fixed-rate bridging loans will still be available.
“There’s no pressure on borrowers to choose the TAB Tracker. If they’re looking for security, they might be better off with the old-school fixed-rate product,” he remarked.