According to mform.co.uk, borrowers are switching to tracker mortgages and cutting back on interest-only loans as confusion in the market continues.

Applications through the online mortgage company in 2008 showed that 58% were for tracker mortgages compared with 33% throughout all of 2007. In addition, the proportion of interest-only mortgages has dropped from 35% in 2007 to 30% in 2008. Figures from the Council of Mortgage Lenders (CML) showed that there were 74,300 interest-only mortgages without specified repayment vehicles in the year to 31 st July compared with 143,600 for the same period in 2007. The popularity of trackers is partly down to the rise of so-called lifetime trackers which link the rate to the Bank of England base rate and allows borrowers to benefit from cuts, according to mform.co.uk.

The most competitive lifetime trackers ranked by true cost including all fees currently include Woolwich and HSBC. There are 32 lifetime tracker products available from lenders including Abbey and C&G.

Francis Ghiloni, mform.co.uk’s marketing and business development director, said: “Borrowers are turning to the flexibility of trackers as the mortgage market confusion continues. The drop in interest-only applications adds to the air of conservatism. Rate rises are on their way back after a period when it seemed as if good news was returning to the market. The benefit of trackers is that many have low charges and early redemption fees enabling borrowers to switch relatively painlessly.”