The recent cut in interest rates by the Bank of England has not necessarily resulted in lower mortgage payments. According to a new report from the Press Association, only eight of 120 UK mortgage lenders have so far reduced their lowered their rates following the base rate decision.
Given this reluctance to pass interest rate cuts onto homeowners, tracker mortgages are becoming more attractive. There are many competitive tracker mortgages which also guarantee a cut in interest rates will be passed on.
Best Current Tracker mortgage deal
One of the best tracker mortgage deals being offered is from Lloyds TSB with an initial tracker rate of:
4.73% until 31/12/2009 it then reverts to a standard rate of 7.5%. There are early repayment charges for first 2 years.
The Co-operative Tracker is also quite competitive at: 4.94% 2 years 7.49% for 276 months (standard variable rate – 7.5% APR )
Alliance & Leicester offer a Tracker mortgage with an initial rate of 5.64% for 2 years followed by a SVR of 6.49% for 276 months 6.7% APR 2 years
Tracker vs Fixed Rate Mortgages
Given the prospects of lower interest rates in 2008, I would advise that at the moment tracker mortgages offer better value than fixed rate mortgages. If house prices do fall next year, fixed rate deals will start to become even more uncompetitive as they are likely to be higher than base rates
