Homeowners on ‘tracker’ mortgages in line to save £300 a month

Paul Dales, chief UK economist at Capital Economics, said the Bank Rate will likely stand at 4pc by the end of this year, before dropping to 3pc in 2025.

“It’s what we think will most likely happen,” he said. “I can’t say the first drop will be in June with great confidence but that’s where we are at the moment.

“It’s then looking like we’ll be at 4pc by the end of the year.”

In January 2023, the last time the Bank Rate was that low, the average two-year tracker deal was 4.48pc, according to data firm Moneyfacts.

Currently, a mortgage-holder with £300,000 left on their 25-year home loan will be paying £1,959 a month based on the average tracker rate of 6.14pc.

Should the tracker rate drop to 4.48pc by the end of the year, the monthly loan repayment bill will fall by £295 to £1,664.

Mr Dales said: “When the Bank Rate drops, those on variable deals will get the benefit before anyone else, which will be very welcome as they’d have been feeling pain even more so than others.

“It’s always a bit of a gamble taking one on, but I’d have thought the share of trackers would definitely go up as the Bank Rate comes down. It’s pretty clear interest rates won’t be going up further so anyone who is feeling brave might go for one.”

David Hollingworth, of broker London and Country Mortgages, said the “fairly punchy” 4pc forecast for the end of the year would cause a shift in the market if it comes to fruition.

“As we see that start to seep through the market, more borrowers will start to go for trackers again,” he said.

“We’ll be back to that classic dilemma of ‘should I fix or should I track?’.

“We’re not seeing that at the moment as well over 90pc are still fixing, but trackers can be appealing as they offer the flexibility of mostly not having early repayment charges.”