Leeds
Building Society has stated that
tracker mortgages share some traits with Argentinean football legend Maradona.
Controlling expectations – the 'Maradona effect' – is key to the success of tracker
mortgages, claims Karen Wint, head of
marketing and public relations at Leeds.
Ms Wint cites Mervyn King, the governor of the
Bank of England, who likens expectations in the
property market to England's defenders in the 1986 World Cup, who expected the striker to turn, when in reality he ran in a straight line.
Property prices may rise and fall due to expectations of
interest rate hikes and dips, whereas tracker mortgages continue based on the bank's
base rate .
"If the Bank of England suggests that
interest rates may have to rise to bring the economy off the boil, market expectations will increase
swap rates, forcing
lenders to increase their
fixed rates and result in the consumer paying more for their
mortgage," said Ms Wint.
"As a consequence, the end result is achieved by controlling expectation and without any real change in path, just as it was by Maradona in 1986.
"The market does however expect the next
Bank of England base rate change to be an increase and the 'Maradona effect' can work in favour of tracker mortgages."
Leeds has also launched a new
tracker mortgage, at 0.25 per cent above the Bank of England base rate, with fee help for customers.
Louise Cuming, an expert at Moneysupermarket, recently stated that tracker
mortgages offer good value in the long-term to
UK buyers.
