Car Insurers Debate Over Future Profits

UK car insurers have been running an unprofitable business for 14 years. Independent market analysts, Datamonitor, say 2009 looks to be a profitable year despite the doubts

March 13, 2008

Budget Report Expectations

Chancellor Darling's Budget Report is expected to raise taxes on alcohol, fuel emissions, flights and many other issues concerning the economy. Tax burdens expected to increase on poorer families

March 12, 2008

Card Fraud Rises Again

Card fraud has increased over past year. Whilst chip and PIN technology has been successful in the UK, criminal activity overseas has increased 77 per cent

March 12, 2008

Tax Cuts Needed To Restore Confidence

Appeals for corporate tax cuts are submitted to the Treasury as it prepares its Budget report this Wednesday. Business and banking sectors are worried about the direction of the UK economy

March 10, 2008

First Time Buyers Take Hit From Stamp Duty

Stamp duty tax has not kept up with the rate of increase in house price inflation over the past decade. Yet another hurdle first-time buyers must leap over to get on the property ladder

March 10, 2008

Read all Finance News

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Compare Base Rate Tracker Mortgages - Search the Whole of Market for best Tracker Mortgage deals

What is a base-rate tracker mortgage?

In basic terms a base-rate tracker mortgage is a mortgage with an interest rate that tracks the Bank of England's base lending rate. Some tracker mortgage deals can be set for a limited period only after which they revert back to the mortgage lender's standard variable rate or SVR. Others can run for the whole of the mortgage term and these are also referred to as lifetime tracker mortgages.

In general, most lenders will set their standard variable rate at around 2% over base which can be interpreted as a kind of discount deal. In an attempt to attract new customers the lender will offer a discount on their standard variable rate for a limited period, usually 2 years or so. This is a variation on an interest repayment. Payments will go up and down each time the Bank of England changes its base rate as will your interest rate but overall you will be paying slightly less. Once the limited period ends, your payments then switch to the lender’s usual variable rate.

Who should choose a tracker mortgage?

Each time the Bank of England's Monetary Policy Committee alters the Bank's base lending rate, a base-rate tracker mortgage will do the same thing. A tracker mortgage may be a suitable option for those who are positive and somewhat optimistic with regards to the long-term prospects for interest rates. As the Bank lowers its base rate so will you lender lower your interest rate.

It is worth noting that some lenders however will not adjust their interest rates for all other variable rate customers. In this case you may find you have to wait longer for your interest rate to be cut, or not have it cut, by the full amount as set by the bank of England's base rate.

On the other hand, should the Bank of England increase its rate, you will find your interest rate will also rise accordingly and must be prepared to pay the increase to your mortgage repayments. In this case those who are already living on a tight or limited budget should not opt for a tracker mortgage. The alternative option would be to go for a fixed-rate mortgage deal and have the peace of mind that you can comfortably cover your monthly repayments.

When to choose a tracker mortgage?

Since the interest rates on a tracker mortgage will either rise or fall, depending on the direction of the base rate, they are therefore a potentially good choice for anyone considering a mortgage during a period where interest rates are falling.

In some cases a discount tracker mortgage may work out to be cheaper than a fixed-rate especially when rates are on the increase. This is because for many it may already be too late to switch over to a cheap fixed rate by the time the interest rates have risen. Naturally all mortgage lenders are out to make a profit, so in the case where they feel more people might be inclined to go over to a fixed-rate mortgage, they will simply raise their interest rates.

If you have opted for a discount tracker mortgage and the interest rate is set at 0.25% or even 0.5% less than the cheapest available fixed-rate, then ultimately an increase in the Bank of England's base rate, of say the same percentage, will not leave you paying extra on your mortgage payments.

Ultimately, opting for a tracker mortgage is a personal choice and is a decision that can only really be made depending on how you feel about which way rates will go. Should they rise you will of course pay more but if they fall your payments should do likewise.

To compare the best mortgage deals online apply for your Free Quote now. Here at the MoneyOutlet we work with a nationwide network of lenders and CeMAP certified brokers offering you the ability to compare all the best deals from high street lenders very quickly.

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Published on September 20, 2007

Darling's Budget Report Highlights

Chancellor Alistair Darling delivers his first Budget Report yesterday. Highlighted in this article are some of the main points... Read More
March 13, 2008

Lending Falls Again Says CML

The amounts borrowed by first-time buyers and home movers continue to drop as the credit crunch takes further grip on the UK mortgage market. Remortgage activity is on the increase as many switch from fixed-rate deals to tracker mortgages in anticipation of further base rate decreases from the Bank of England... Read More
March 12, 2008

Interest Rates Kept At 5.25%

Yesterday, 6th March, the MPC decided to keep the base rate at 5.25 per cent. This decision was to be expected as the Bank focuses on the pressures of rising inflation and a slowing economy. Analysts are predicting another cut to 5 per cent to happen in May unless economic conditions weaken substantially. Whilst some feel the MPC shouldn't wait too long before the next cut, many agree with yesterday's decision... Read More
March 7, 2008

20 Per Cent Of Homeowners Fear Repayments

The UK's financial watchdog, the FSA, published a survey of over 500 mortgage holders which revealed 1 in 5 are worried about being unable to keep up with their mortgage repayments. It is estimated that 1.4 million fixed-rate or discount deals will expire this year raising monthly repayment amounts. Twenty five per cent of those surveyed admitted they had no contingency plans to meet these costs... Read More
March 6, 2008

Mortgage Criteria Becoming More Difficult

Mortgage borrowers are once again being hit with more criteria from lenders as the credit crunch becomes solidified in 2008. Not only have 100% and 125% mortgages been pulled from the shelf, now many lenders require a minimum of 10 per cent deposit in order to qualify for credit. It is now highly recommended to save as much as possible for your deposit and improve your credit history before applying... Read More
March 3, 2008

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Personal Mortgage Centre - Tips & Information

• Mortgage Basics
• Remortgaging - The Basics
• Reasons to Remortgage
• Interest Only Mortgage - A Quick Guide
• Home Information Packs (HIPs) - A Brief Explanation