Tracker mortgages offer better value

Posted 2007-12-17

According to mortgage broker John Charcol, tracker mortgages offer better value than fixed-rate alternatives. Charcol’s confidence in trackers comes from the small number of mortgage lenders who have who have lowered lending rates in line with the Bank of England’s recent interest rate cut.
For some time Ray Boulger, Senior Technical Manager for John Charcol, has been recommending trackers to people taking on variable mortgages. He said:
“We have seen over the last few years there is always a proportion of lenders who do not move their rate in line with the Bank’s rate. Most of the time a tracker mortgage is a quarter of a percentage point higher than a fixed rate mortgage, providing the starting point is good.”
Mr Boulger noted that because of the credit crunch, mortgage lenders were cutting down their portfolios, to mitigate any risk.  However, he predicted, that trackers will be available as no restrictions will be placed on them as base rates fall. Despite his belief in the value of tracker mortgages, Boulger does not envisage a rise in consumers switching mortgages, he said:
“The reality of people deciding to look at their mortgage product is based on whether the value of a discount mortgage is cheaper than a tracker mortgage or vice versa.”

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