Cheaper tracker rates

Thursday 05 March 2009

In the financial crisis environment, mortgage lenders set up low rates on tracker deals rather than high in order to help borrowers evade high interest rates. For instance, Woolwich's tracker rates do not exceed 5.99%, and Coventry Building Society's tracker rates are fixed at 4.99%. Generally, tracker rates change as the bank's base rate changes; since the tendency for the base rate was to decrease, tracker rates were popular with borrowers. Yet, the recent cut down to 1% was alerting. This resulted in big mortgage lenders offering new tracker rates. New Woolwich's lifelong tracker deal includes 2.99% above the base rate (capped at 5.99% during the first three years). Even if the base rate rises above 3%, the tracker rate will be frozen. Lenders believe that these measures appeased the borrowers. New tracker rates offer benefits regardless of the consequences of the financial crisis. If the base rate decreases, the payments will also decrease; if the base rate grows, the tracker rate will be limited, thus protecting the borrower. Borrowers who prefer fixed mortgage deals also can find interesting deals, which might be even cheaper than tracker deals. Several lenders offer 2 and 5-year fixed mortgages at 4-5% interest rate.