Tracker rate mortgages

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The increased popularity of base rate tracker mortgages in the UK is reflected by the growing number of tracker mortgage deals available on the market and the highly competitive rates offered.

Base rate tracker mortgages are tied to the Bank of England base rate, so that your mortgage rate moves in line with base rate changes, and not when your lender decides it should be changed. This is certainly an attractive feature for those borrowers who wish to maintain some independence from the commercial decisions of their mortgage company. Having said this, it is always important to read any "small print" that may be detailed within the Mortgage Offer.

It should be noted, however, that tracker rate mortgages are variable, and therefore the cost of these mortgages could be subject to sharp increases should the Bank of England Base Rate rise rapidly. Specialist advice should always therefore be sought when considering these products.

The fact that trackers are tied to the base rate means that from the lender's point of view the element of risk is reduced, as compared to a fixed rate for example, where the lender could be caught out if rates rise. For this reason tracker rates tend to be amongst the lowest available.