Research also revealed the age groups that preferred fixed rates and standard variable rates
The youngest group of homeowners are more than twice as likely to choose a tracker mortgage than any other age group, according to price comparison platform Uswitch.
The platform’s mortgage statistics report showed that tracker mortgages are much more popular for homeowners aged 18 to 24, as 17.82% took on the risk of fluctuating interest rates influencing their monthly repayments.
While fixed-rate mortgages are the most popular across all age brackets, they are utilised far less by the homeowners in this age bracket. Uswitch said at least half of every other age bracket has a fixed-rate mortgage – with around four in five, or 80.73%, of 25- to 34-year-olds choosing this rate, while only 41.58% of 18- to 24-year-olds opted for this deal.
The Uswitch report, which based its findings on its survey of over 2,000 UK homeowners, also indicated that at 7.47%, those aged 45-54 are the second most likely to choose tracker mortgages. While far less likely than 18- to 24-year-olds, these homeowners are twice as likely to opt for a tracker deal than 35- to 44-year-olds, the least likely of any age group analysed to take on a tracker mortgage at 3.72%.
Standard variable rate (SVR) mortgages are also more popular with the 45- to 54-year-olds, as one in five, or 20.24%, have taken these mortgage plans. Those aged 55 or older are the most likely to have a standard variable rate mortgage at 35.66%.
Uswitch pointed out that with those on tracker mortgages seeing significant hikes in their monthly repayments, homeowners without the safety net of a fixed-rate mortgage are considering moving to a new deal. However, the possibility that interest rates could decrease after peaking in 2023 could result in lower monthly payments for those who took tracker mortgages, and more money saved in the long term.
Claire Flynn, mortgage expert at Uswitch.com, has offered some advice on what to do before applying for a new mortgage deal.
“Give your finances a health check,” she said. “A good credit history is essential to getting a good mortgage deal, so be sure to check your credit report for the full picture of all your outstanding debts.
Click here to know how your credit score can affect your chances in getting a mortgage.
“Try to reduce spending. Not only does lowering your spending help save for a deposit, but fewer outgoing payments may also help your chances of being accepted for a loan.”
Flynn added that borrowers should also “apply with caution” and never be tempted to make multiple mortgage applications just to see what kind of offers they can get.
“Every time you apply for a mortgage, the lender will perform a hard credit check which can affect your credit score,” she explained. “Instead, consider talking to a mortgage broker to get a better understanding of what deals are the right fit for you.