Tracker Mortgages - Interest Rate Uncertainty

Tracker

A Tracker mortgage is a variable rate mortgage where the interest rate always follows the Bank of Englandís Base Rate.

Interest Rate Uncertainty

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Not everyone does worry about the chance that the Bank of England base rate will rise. Seeing the relative stability of recent years and knowing that a Tracker mortgage will perhaps only be in force for 2 years many borrowers are willing to take the risk in the knowledge that should the rate drop they will save money.

We live in uncertain times and stability can never be guaranteed but some people are more confident about the future than others and they can often find a mortgage that is more suited to them in a base rate Tracker.

Borrowers may also have the finance available to cover any slight rises in the base rate during that time. Guessing the fluctuations of the Bank of England base rate will seem like gambling with their house to some people who have tight budgets and little margin for contingency but for others the real possibility that their Tracker mortgage choice might pay off with savings is a risk worth taking.

The Tracker mortgage links directly to the Bank of England base rate at the agreed margin so it removes the possibility of influence by the lender. Once a base rate change is announced the borrower does not have to wait to see if their lender will respond with an equivalent change to their Variable Rate.

The Bank of England base rate is open to scrutiny by all and its visibility and importance do serve to control any major moves.

For those who keep a careful eye on the economy they may feel that a base rate drop is imminent, it can only be a guess based on recent conditions, but if they are confident of a fall it will make sense to them to avoid a Fixed Rate mortgage in favour of a Capped, Tracker or Variable mortgage.

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Typical Interest Payments

First Time Buyers

2.89%

Purchased Fixed

2.89%

Discounted Rate

2.99%

Buy To Let

2.99%

Commercial

3%

 

 

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