In the last few months, mortgage lenders have removed lots of products from the market.
And in the days immediately before the shock interest rate cut, many tracker mortgages were pulled by banks and building societies.
Now three of the biggest mortgage lenders have relaunched the first tracker mortgages since the mass exodus last week. However they are not passing on the full 1.5% base rate reduction.
- The big 3 make the first move
Abbey has introduced a 2 year tracker mortgage that gives a rate of 4.99% (1.99% above base) and available for up to 75% of the value of the a property. At the beginning of last week it was offering a 2 year tracker mortgage at a rate of 5.29%.
Lloyds TSB has also increased the margins on its two-year trackers to 4.79% for those of you with a 25% deposit.
Meanwhile Alliance & Leicester has a new tracker mortgage that requires a deposit of 40% and gives you a rate of 4.89%. However, it comes with a hefty 1% fee.
Check out some of the most popular mortgage lenders
- More of us are opting for tracker mortgages
Increasing numbers of borrowers are opting for tracker mortgages as shown by new figures from the Council of Mortgage Lenders (CML). They show that the percentage of us choosing a tracker rate mortgage is now at 34%. This is a rise from 28% in August and the highest level since comparable records began in 2005.
This is despite the fact that Bank of England figures show that tracker mortgage rates have reached their highest level in over seven years last month.
The average rate on a tracker mortgage rose from 6.12% to 6.84%. Experts said that the rapid increase in tracker rates was because of a sharp rise in the cost of borrowing between banks.
- Fewer people getting mortgages
Meanwhile, the CML figures show that the housing market woes increased in September. Only 35,000 of us were granted a mortgage for house purchase (rather than a remortgage), down by more than 50% from 80,000 in September last year, and 66% lower than the peak level of 102,700 in August 2007.
The number of first-time buyers also halved, plunging to 13,400 from 28,200 in September last year.
Mortgage advisers estimate that new home purchases represent only 25% of all mortgages being issued.
So, it seems that tracker mortgages are worth looking at again.
But is it a type of mortgage you will consider?
(Please note that articles on Money Hospital do not constitute regulated financial advice. The articles are intended to provide general personal financial information, and are based on journalistic research. We urge you to consult an Independent Financial Adviser (IFA) before making any important decisions about your finances. All rates are correct at time of printing but are subject to change without notice.)
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November 17th, 2008 at 9:30 am
I really didnt think we would be seeing these for a long time. the goverment has to me more tough with these organisations and insist that they pass the cuts on to its customers.
November 17th, 2008 at 10:28 am
Even if Bank of England drops their base rate to 0.oooo1% that doesnt mean nothing unless you have a tracker that follows the base rate.There is a surprise between B.of E and all other banks it is called LIBOR,the letters stand for London Interbank Offered Rate,This controls the interest rate world .Bottom line is dont cry at the bank of england winge and bitch at LIBOR.
Then once this is done then the banking system has to knock down the percentage for mortgages Example;to buy a house, you have to have 25% to the value of the house,so if the house is £100,000 you will need £25,000 cash and this so the bank will offer you the other £75,000. So instead of the percentage being 25% It needs to go back between 85%-95%.This is so that the ordinary person can afford to buy a property.
But there is a chain affect to this section,once people can borrow more and have less of a deposit then the houses are going to start increasing in value and then we will be 10 years from now in unother recession, everyone talking about everything you heard for the past 6 months.
So there is a few reasons why we dont see a movement in 1 thing but several.
November 18th, 2008 at 7:06 am
Banks are no charity organisations. The capitalist system is not in the least interested in how we mortgage holders may suffer.
November 19th, 2008 at 2:28 pm
When i took out a tracker mortgage with Woolich ( Barclays) a year ago , no one talked of it tracking the LIBOR interest rate, i was told that it would track the BofE base rate, so suprise, suprise that i have not had a cut in my mortgage repayment even though the BofE rate has dropped about 3% in total since i took it out…. What a rip off
November 19th, 2008 at 6:16 pm
@ Glenn: Presumably you have had a cut in interest, but just not the repayment?
I spoke to one Woolwich Lifetime Tracker customer who informed me that the bank are keeping his monthly payment the same, it would just be paying off more of the capital and less of the interest.
Would be interested to hear what communication Woolwich sent to you, if you get a chance to comment back
November 20th, 2008 at 9:36 am
thinking of getting a tracker mortgage, remember the collar…
It is also worth checking what if the tracker mortgage you thinking of getting has a collar, i.e. the rate will not drop below a certain point. These are very common on tracker mortgages, I think there are some out there that don’t not have a collar, but they will not be around for long.
November 23rd, 2008 at 11:43 am
Thankyou Mark, just to say that Woolich have never sent me any communication so i never realised this was the case. When i spoke to bank staff at barclays they were suprised that the mortgage had not come down and could not tell me why !so i appreciate your comments
December 5th, 2008 at 12:46 pm
I have a tracker with Woowich, I rang last week to find out why my payments had not come down. They said that unless they are notified by the customer they keep the payments the same treat it as an overpayment. I asked my payments be reduced this is happening from January. I will have to ring again and ask for the latest base rate cut to also reduce my payments or once again it will be treated as an overpayment. Seems a bit of a cheek to me.
December 5th, 2008 at 7:16 pm
Hayley, presumably when you took out your tracker you had an affordable amount to pay? Unless you’ve lost income of some sort, wouldn’t it be more sensible to continue the payments to get your loan to value amount down so that should you need to re-mortgage in the future you can have more choice?
December 6th, 2008 at 6:51 pm
Under normal circumstances yes I would do that but because I work for a small company and we are already beginning to see a slowdown of work, my concern is that if something were to happen with my employment I would rather have some money to fall back on. When the ‘recession’ is over any money saved (the difference is mortgage payments is going in to a separate account just in case) will be put towards reducing the mortgage.