Tracker deals are returning to the market.
Three of the country's major lenders have launched new tracker mortgages this week after the majority of deals disappeared from the market following the Bank of England's unprecedented rate cut.
Abbey, Lloyds TSB and Alliance & Leicester are all advertising new trackers, although the margin between the base rate and the rates offered on the new loans is much larger than it was prior to the monetary policy committee's 1.5 percent reduction.
The two-year tracker on offer from Abbey has a rate of 4.99 percent, while Lloyds TSB is pegging its two-year deal at 4.79 percent and Alliance & Leicester's new loan is available at a rate of 4.89 percent.
Borrowers are also being asked to produce larger deposits in order to qualify for the new loans. Indeed, Abbey and Lloyds TSB are demanding a deposit of at least 25 percent, while Alliance & Leicester's deal is only available to those with a 40 percent deposit.
The Times reports that according to figures from the Council of Mortgage Lenders, some 34 percent of borrowers chose to take out tracker mortgages in September in anticipation of base rate reductions. This was the highest level since records began in 2005.
Mortgage broker John Charcol is advising borrowers who already have tracker mortgages and will be enjoying much lower rates to overpay on their mortgages in order to clear them sooner.
