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Why get in a fix, when you can cap for less?

19 Jul 2011

A capped tracker mortgage will secure homeowners against Base Rate rises and save them money over the next 3 years. 

first direct 's 3 year Capped Tracker mortgage has been launched as the perfect solution for borrowers unsure of how long the current record low 0.5% base rate can last, and whether they should track or fix. The 75% LTV deal currently charges 3.08% (2.58% plus Bank of England base rate), and is a full 1.24% cheaper than the average 3 three year fixed 75% LTV mortgage. 

first direct 's calculations (see below) show that if the Bank of England Base Rate (BR) remains below an average of 1.75% over the next three years, its Capped Tracker mortgage holders will always be better off than their contemporaries taking the market's current average fixed rate of 4.32%. 

So for a £150,000 mortgage holder, at today's base rate, they would be over £100 per month better off with FD's capped tracker, than the same borrower taking today's average 3 year fix. 

Where's the catch.... what's the downside?

However, should rates spike, the capped borrower has a maximum downside of being just £22.08 per month worse off, as the cap will stop monthly payments rising further.           

Table of monthly payments:

Base Rate

first direct 2.58% + BR Capped Tracker (capped at 4.38%) monthly payment (months 1-36)

*4.32% Fixed rate mortgage monthly payment

(months 1-36)

0.50% (current)



















£840.57 (capped rate kicks in)


first direct 's capped tracker is always more favourable than today's average 3 year fixed rate of 4.32% until the BR reaches 1.75%. 

Richard Tolchard, Senior Mortgage Product Manager at first direct commented:

"It's understandable that many borrowers are nervous about missing out by fixing too soon or being stuck on a tracker when the rates go up. However, with economists almost unanimous that rates won't increase this year, a Capped Tracker lets them benefit from low variable rates now with the cap there to protect them should rates rise quicker and higher than anyone thought."


For further information on this press release please contact Rebecca Hirst on 01132 766899 or or Amanda Brown on 01132 766700 or



Notes to Editor 

*Mortgages used for example 

All products illustrated with a £150,000 25year mortgage. 

  • first direct 3yr 75% LTV Capped Tracker currently 2.58% +BR (3.08%) capped at 4.38% until September 2014
  • Average industry wide 3yr 75% LTV Fixed Rate mortgage currently 4.32% 

Average industry wide mortgage information is according to Bank of England data 30/06/11

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