Base Rate Trackers & Lifetime Trackers
With Interest rates falling since December 2007, it wouldn’t be a bad guess to predict those on Base Rate Tracker Mortgages benefited the most, average rates of between 3-6% over the last 20 years have been smashed to an all time low of just 0.5%, those with larger mortgages will have saved an enormous amount while those with smaller mortgages will have saved less but will not have seen a single rise in their mortgage repayments.As long as the BOE base rate doesn’t rise and inflation stays low savings could be made for years to come, it is important to know however that application fees have risen 13% since late 2009, so it may be a bit late to take full advantage.
What is a base rate tracker?
This type of mortgage follows (tracks) the Bank of England Base Rate or it could be designed to follow the lender’s own Standard variable rate (SVR). So if tracker has a Base Rate of say plus 0.5%, then if the Base Rate is 2.0%, your repayment rate will be 2.5%. The lender could at any time raise their SVR if on such a mortgage but with a BRT the amount is fixed until the end of the term. Base rate trackers also come with lower fees than discounted or fixed rates. So because the rate is fixed by the lender and is free from unnatural increases borrowers tend to find this product appealing. This mortgage can also be discounted for the first few years helping you to save money. Lifetime tracker mortgages will track the Bank Rate for the entire term of your mortgage with a guaranteed maximum percentage of typically 3% with a £999 setup fee.
Santander have recently launched a new two-year tracker mortgage for borrowers who are looking to remortgage, it is available for up to 70% LTV, with a rate of 2.99% and no fees. While Woolwich provide a Lifetime tracker with rates from 2.6-3.2% again with a max LTV of 70% this isn’t a remortgage either, mortgage deals for remortgages come with no setup fee.