Brokers who advise customers to remortgage low base rate trackers would be “clinically mad”, according to Martin Stewart, director of London Money Loans.

Martin’s comments followed the Bank of England’s decision to cut the base rate to 0.25%, which could lead to more clients seeking second charge mortgages rather than losing a historic low tracker mortgage.

“Although the mainstream mortgage rates have been coming down considerably [for] fixed and variable rates, the lenders are tightening who qualifies for these rates,” Martin explained.

“This will [result] in more declines and a reason to refer them [to] a second charge loan, which is now a very attractive rate, [while] also keeping their first charge rate intact.

“Some old historic base rate trackers may be very close or at 0%, so a broker would have to be clinically mad to move them off that, making a second mortgage very viable.”

As a second charge packager, Martin said that his customers had already started to benefit from the Bank of England cuts.

London Money Loans currently has two deals in the pipeline with Precise Mortgages due to the lender passing on the base rate cut to the client, including a £150,000 buy-to-let second charge on interest only terms with the client able to save £36.94 per month.

Another deal for £97,000 over 14 years offers savings for the client of £12.47 per month.

Mark Lofthouse, CEO of Mortgage Brain and LoansBrain, was keen to see this savings trend continue across the sector.

“We would hope that this cut is passed on to borrowers, but it’s up to each lender to determine their own approach.

“Second charge loans should be provided on the basis that it is best for a customer, and in some instances this is the case and in others it is not.

“A reduction in rates will be an important factor in their consideration.”

However, Peter Williams, executive director of the Intermediary Mortgage Lenders Association, claimed that the base rate changes could see a rise in remortgaging.

“Lower for longer is good news for consumers, who will reap the benefits of strong mortgage affordability.

“Borrowers on tracker deals will see a reduction in their monthly payments, and remortgagers will be well-placed to tap into attractive deals.”

Indeed, Martin admitted that with some first charge mortgage rates falling particularly low, seconds lenders may need to consider changing their offerings to compete.

“I would imagine that the major players trying to compete with the prime market space will either drop their rate, or look at becoming more niche and looking for deals off prime a little bit more complex, which [most] prime lenders may not consider.

“It’s all down to how the lender is funded and the margins they need on a deal to make it viable.”