Tracker mortgages withdrawal 'a big shock' for borrowers reaching ends of deals

Date:Thursday 13th November 2008

A substantial withdrawal of tracker mortgages could be "a big shock" for homeowners reaching the end of their current deals, it has been said.

In the past week, 23 tracker mortgages have been taken off the market, according to

Al Elliot, adviser with the Homeowners Advice Centre, said that fixed rates are very expensive at present.

But he added that they seem to be "the only option available to borrowers who are seeking new finance or about to exit an existing loan".

Mr Elliot suggested that "cap and collar" mortgages be used when the base rate returns to four to five per cent.

In such deals, a mortgage tracks the base rate but has maximum and minimum limits.

According to the Council of Mortgage Lenders, around 45,000 properties are expected to be repossessed this year, comprising 0.38 per cent of the UK's 11.74 million mortgages.

Research for Cheltenham & Gloucester by Tickbox and Opinion Matters, published in September, found that 32 per cent of people would rather pay a higher rate with their current mortgage lender than risk being rejected by another.