Tracker mortgages set for popularity

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Tracker mortgages provide homeowners with an attractive alternative to fixed-rates and are now, in most cases, better value for money over the long term, it has been claimed.

According to independent mortgage advisor John Charcol, some providers will always fail to lower rates on their variable-rate deals following a reduction in interest rates, but tracker mortgages ensure customers are protected from this practice.

Ray Boulger, senior technical manager at John Charcol, explained that there are still a number of excellent tracker deals available on the market, despite the recent trend of providers removing deals, following the global credit crunch and prevailing sense of economic uncertainty.

"We've been recommending tracker mortgages for those people who want a variable mortgage for a long time. If you do want a variable rate, the choice is effectively between a discount off APR or a tracker," he said.

"Because of the services a tracker provides, in that you're guaranteed to have your rate move in line with the Bank of England rate, as opposed to being at the mercy of your lender, I think that now trackers are really coming into their own."

The Press Association recently found that only eight of the 120 mortgage lenders in the UK have so far lowered their rates following the Bank of England's decision to lower the base rate by a quarter of a per cent. It estimates that such a reduction could save customers £40 a month on a £250,000 mortgage.

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