Value of Tracker Mortgage Expounded

Posted 2007-12-17

Looking to purchase or refinance a house? Mortgage broker John Charcol has some words of wisdom. Resulting from the meagre numbers of lending companies who reduced their mortgage rates to reflect the Bank of England’s rate cut, John Charcol has expressed its satisfaction with tracker mortgages.

A tracker mortgage, for those unfamiliar, is a variable mortgage that closely tracks the Bank of England’s rate. Although they are typically a quarter percentage point higher than a fixed rate mortgage, John Charcol explains that they enable the customer to be free from the lender’s whims.

Senior technical manager for John Charcol, Ray Boulger, said he had long been recommending tracker mortgages as a good choice for a variable mortgage and that, “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.”

Mr. Boulger went on to say that even though a number of lenders had recently reduced the number of mortgage options they provided to customers, he expected the tracker mortgage to continue in its availability. Furthermore, he did not foresee lenders placing restrictions on them as rates fall.

On the same hand, Mr. Boulger did not foresee a mass surge of refinances in favour of the tracker mortgage. He explained his reasoning that, “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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