Base rate cut wipes out tracker mortgages

Tracker mortgages are becoming increasingly hard to find following the Bank of England’s aggressive attack on the base rate of interest.

Market statistics show that in the last year, the number of tracker mortgage products available has dropped by over 700, from 763 to 45.

This is expected to decline further next year with additional cuts in the base rate anticipated.

It is also becoming more difficult to qualify for a tracker mortgage, with the average loan-to-value (LTV) rate falling from 74% to 68% in the past month. Maximum LTV has plunged from 90% to 75%.

As such, only home owners with significant savings or who have already part paid-off their mortgage now qualify for flexible rate mortgages.

Furthermore, margins on tracker deals have increased.

On 5th November, the average two year tracker rate was 1.67% above the Bank of England’s base rate. This has now increased to 2.31% above the base rate.

Prime Minister Gordon Brown is urging mortgage lenders to behave ‘responsibly’ towards customers whose finances have been stretched by the credit crunch.

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