Tracker mortgages increasing in popularity

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by Kay Murchie

A tracker mortgage has an interest rate which follows the Bank of England’s base rate which means monthly repayments go up when the base rate goes up, and go down when the base rate goes down.

These types of mortgages are growing in popularity among borrowers at present, with many people expecting interest rates to continue to drop.

According to Moneysupermarket, tracker deals offer good value to borrowers, however, there is an element of risk involved.

Moneysupermarket said that people who are not too concerned about affordability should consider taking out a tracker-rate mortgage in order to benefit from further cuts in interest rates.

According to Louise Cuming, head of mortgages at Moneysupermarket, there are currently 24% of people on tracker mortgages - the highest level since 2005.

For those who aren’t too concerned about affordability, a tracker rate is a good option, concluded Ms Cuming.

Earlier this week, Bank of England Deputy Governor, Rachel Lomax, warned of slowing growth and rapidly rising inflation in a sign that interest rates will come down slowly.