Trackers are disappearing and mortgage borrowers could be forced onto fixed rates, it has been suggested.
Many homeowners could be in for a shock when their current mortgage deal comes to an end, according to the Homeowners Advice Centre. Spokesperson Al Elliot said consumers who currently have tracker mortgages could be forced to take out costly fixed rate loans instead due to the withdrawal of many tracker deals from the market.
"Fixed rates are currently very expensive," he remarked. "However," he added, "this seems the only option available to borrowers who are seeking new finance or about to exit an existing loan."
He explained that in the past tracker mortgages have "made sense" for lenders because inter-bank lending rates and the Bank of England base rate have stayed at similar levels. But with the base rate now standing at three percent and inter-bank lending rates remaining at around 4.5 percent, there is a disparity between the two, which is prompting banks to re-price or withdraw their trackers.
According to research carried out on behalf of Cheltenham & Gloucester recently, 42 percent of homeowners are concerned about the lack of choice in the mortgage market. However, the survey also revealed that 32 percent of mortgage borrowers would rather pay a higher rate with their existing lender than risk being rejected by another one.
