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Discounts to get boost as fixes begin to rise

A surge in the popularity of tracker and discount mortgages is predicted by lenders following a recent dramatic rise in the cost of borrowing on the money markets.

Lenders say that with swap rates shooting up by 0.5 per cent and fixed-rate mortgages being repriced upwards, variable-rate mortgages will appear very attractive to consumers.

Accord Mortgages has just launched a new range of discount products and managing director Linda Will says it has proved very popular, seeing £5m of business on its first day. It says it usually takes a week to build up to these levels of business.

Managing director Linda Will says: “Even with the recent concentration on fixed rates, one in every five loans so far this year has been on a discount and we reckon this percentage is set to rise dramatically.”

Platform sales and marketing director Guy Batchelor says: “With fixed rates being repriced upwards, discount and tracker mortgages are looking more competitive in terms of pay rates as the bank base rate has stayed the same. We will certainly see greater numbers of these products selling. We are also likely to see a run on fixed rates though as the consumer will want to fix fearing more increases in the future.”

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