Tracker mortgage rates were at a seven year high in October, despite the base interest rate falling, new statistics from the Bank of England have revealed.
According to the statistics, the average tracker mortgage rate attached to the base rate, increased to 6.84 per cent in October, from 6.12 per cent in September, this is despite the fact that the Bank rate was cut by 0.5 per cent to 4.5 per cent, in early October.
The base rate has now fallen to just 3 per cent, which immediately prompted banks and building societies to remove their tracker mortgage
deals for revision.
These deals have since been re-introduced today, but without the full base rate cut.
Until the latest rate cut, according to experts, it was common place for tracker mortgage interest rates
to be as little as 0.5 per cent above the base rate. However, the latest offering from Abbey offers its lowest rate at 1.89 per cent above the base rate of 3 per cent for a two year tracker.
Alliance & Leicester has become the latest bank to reintroduce a 'revised' tracker mortgage range, offering the same low rate as Abbey at almost two full percentage points above the base rate.
Both Abbey and Alliance & Leicester have also re-launched their fixed mortgage rate deals to reflect the Bank rate drop and both now offer a low rate of 4.49 per cent on a two year fixed rate mortgage, dependant on LTV.
According to Moneyfacts.co.uk, as banks continue to launch new fixed and tracker rate mortgage deals, standard variable rate mortgages may suffer. Analyst at Moneyfacts.co.uk, Michelle Slade said:
"In the last year we have seen numerous lenders cease to offer SVRs to new customers. Now as base rate falls, we may see more lenders taking this step, to prevent them from receiving frequent applications from borrowers who may now see SVR products as an attractive option."
© Fair Investment Company Ltd