Tracker mortgage homeowners in for 'big shock'

Posted: 13 Nov 2008 10:40:40 GMT

A number of homeowners could be stung by rises in their monthly repayments when their tracker mortgages expire.

That is according to a property expert from the Homeowners Advice Centre, who explained that the removal of over 20 tracker mortgages in the past week would result in a "big shock" for many homeowners when they come to the end of their current deal.

Al Elliot, an advisor at the debt advice provider, explained that most fixed-rate mortgages remain quite expensive despite the recent interest rate cuts, but that many homeowners will be left with no other alternative when renegotiating their mortgage

There is such a big disparity between base rates and Libor (London Interbank Offered Rate), I can see why lenders are re-pricing or withdrawing trackers," he explained.

Mr Elliot added: "Fixed rates are currently very expensive - which is a clue that lenders don’t expect Libor to go down dramatically anytime soon - however this seems the only option available to borrowers who are seeking new finance."

According to Moneysupermarket.com, lenders have removed 23 tracker mortgages since the most recent base rate cut on November 6th. It also found that 24 of 54 fixed-rate bonds were removed in the 24 hours following the rate decision.

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