A tracker mortgage is very much like any other mortgage in most ways. However, whereas the standard variable rate mortgage interest rate is set by the lender, a tracker mortgage has its interest rate set with reference to in most cases, the Bank of England’s Base Rate.

The Bank of England reviews its base rate every month and sets the rate as a means of setting the cost of money banks ‘buy in’. As the rate rises lending rates are likely to follow. With a tracker mortgage the mortgage interest rate specifically tracks indices like the Bank of England Base Rate.

If the Tracker Mortgage interest rate is set at 2% above Bank of England Base Rate then if the Base Rate were to rise from 0.5% to say 1%, then the mortgage interest rate would rise accordingly from 2.5% to 3%.

At the time of writing (November 2015) the Bank of England Base Rate remains at an historically low 0.5%. Base Rates can rise for many reasons but generally, as the economy grows and inflationary pressures are felt in the general economy, the Bank of England will aim to gradually increase their Base Rate to control inflation and protect the value of the currency.

It’s worth noting that in most scenarios, a bank’s standard variable rate will probably rise and fall as the Bank of England’s Base Rate rises and falls anyway. But a Tracker Mortgage makes this link explicit.

For more information about tracker mortgages contact us or speak to a mortgage adviser on 01628 507477.

Download our Free First Time Buyers Guide

Recent posts

The average seller’s asking price dropped by 0.4% in July, a bigger drop than we have typically seen. 

We explore the differences between Millennials and Gen Z and what both generations ideally want from a new home.

Should you overpay your mortgage? If you can put extra cash away you need to seriously consider whether you should pay more off on your mortgage or put it into a savings account.

Buying a property, especially in the current climate, is a big decision for first time buyers. We have listed a few tips that can help you buy your first propertyy

Does the time of year make a difference in house purchases? The answer is, yes and no.

The popularity of buying a house can vary depending on various factors such as regional trends, how the economy looks, and of course personal circumstances. 

If you are looking at putting your house on the market, you may want to consider giving your garden some TLC. Small changes can make your outside space a lot more attractive to potential buyers resulting in a faster sale.

Getting on the property ladder is a big milestone in life, and is not something to take lightly. There are several things to take into consideration such as saving up for a deposit, finding your dream home, and finding the best mortgage product to suit you. Here we look at UK first time buyer statistics.

If you are struggling to get over the hurdle of saving enough deposit due to being in a rental property, but wish to purchase your own home, you may be able to with a 100% mortgage. You will need to meet certain requirements and be financially stable.