Tracker mortgage holders 'must prepare for higher costs'

Date:Wednesday 4th March 2009
Author: Max Freedman

Homeowners with tracker mortgages have been warned that they probably will not be able to obtain similar deals when their current one ends.

Bernard Clarke of the Council of Mortgage Lenders told such borrowers to "plan ahead" and explained that they face deals which are "a little more expensive" in the future.

However, he said that the deals should remain "very affordable" and pointed out that anyone who has been on a tracker mortgage earlier than four months ago will already be accustomed to paying higher rates.

Asked whether homeowners should consider long-term fixed-rate mortgages, he explained that people must realise the "nature of the commitment" and recommended taking independent advice.

Mr Clarke added that overpaying a mortgage is wise if it can be done, as it reduces both the cost and time duration of the loan.

At one per cent, the current Bank of England base rate is at its lowest level since the institution's inception in 1694.

In October it was 4.5 per cent.