Tracker Mortgages

Tracker mortgages move up and down with the Bank of England base rate and are currently looking better value for buying houses in Shropshire. The rate for fixed term loans has risen steeply over the past couple of weeks.

Economists are predicting that the bank of England base rate will remain at an all time low of 0.5 per cent for the foreseeable future. This prediction came after the bank of England announced that the economy would take longer than previously thought to show signs of growth.

The HSBC is currently offering a tracker deal believed to be the best on the market, providing home owners have a 25 per cent deposit and pay a £799 fee. The tracker has a rate of 2.95pc, or 2.45pc above base rate, for the mortgage’s term with no early redemption penalties.

The best five-year fixed-rate deal available charges 4.99pc and is offered by the Co-operative Bank to people who have a 25pc deposit and pay a £995 fee, meaning the base rate would have to rise to 2.5pc just for the rate to be similar to that on HSBC’s tracker.

People who are switching to trackers should look for one that does not have early redemption penalties

People who are switching to trackers should look for one that does not have early redemption penalties, or one that offered the chance to move to a fixed-rate deal with the same lender. This will give them the option to move should the circumstances change.

In June commentators had advised home owners to lock into a five-year fixed-rate deal before interest rates started to rise again. But many revised that advice in July when lenders began to raise the cost of their fixed-rate deals in response to increases in swap rates, on which the mortgages are based.

The increases to fixed-rate deals have continued, with Abbey and Alliance & Leicester, both part of Spanish banking giant Santander, announcing they were raising the cost of their five-year fixed-rate mortgages taken out through intermediaries by 0.19 of a percentage point to 5.98pc for people with a 25pc deposit.

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This entry was posted on Thursday, August 13th, 2009 at 10:28 pm and is filed under Buying Property in Shropshire. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.