5 Tips For Avoiding the Tracker Mortgage Price Crunch
Posted by: Jenny Challenor
September 14th, 2007.
Three lenders have announced re-pricing upwards or withdrawal of their tracker mortgages and like a stack of tumbling dominos, others are expected to follow suit.
Abbey made the first move a couple of days ago, increasing tracker rates by 0.1% and 0.2% in response to market pressure. Standard Life quickly followed suit, withdrawing its full tracker range, and yesterday the Bank of Scotland and Halifax announced increases in their rates.
The knock-on effect of US sub-prime loans defaulting means there is a global credit shortage, and this means it is costing UK banks more to borrow funds.
Banks and Building Societies are feeling sweat on their brows and are reacting by building their defences in cash reserves. This is why we are seeing competitive savings rates enter the market, followed by a squeeze on deals being offered to borrowers.
Those who are mortgaged high can’t avoid feeling nervous now and rightly so. The fact is the cost of borrowing is going to rise in the future and there is no avoiding it.
Borrowers need to weather the storm and for those who are worried now, the key is preparation. Here are our 5 tips:
- If you are coming to the end of your current mortgage arrangement then speak to a mortgage broker who can help you find the best deal. If your budget is tight and you can’t afford to shoulder fluctuating repayments, don’t hesitate to fix your mortgage.
- Despite news that tracker deals are being priced upwards they are still offering borrowers the better value deal. Indicators are all pointing to the fact that interest rates have peaked and if so, borrowers with a tracker mortgage which is linked to the Bank of England base rate, will benefit if rates fall next year.
- If you are struggling with your repayments then speak to your lender. It may be possible to extend the term of your loan or to switch to an interest-only mortgage, until you have got through your financial difficulties.
- Budget now while you are ahead of the game. It’s the basics, but look at your outgoings, cancel subscriptions and memberships you don’t need or use, switch to cheaper utility providers and curb your spending.
- Prioritise your debts. Your mortgage and loans secured on your home should be at the top of your list and you should do everything possible not to fall into arrears, even if this means paying only the minimum balance on other debt commitments.
This entry was posted on Friday, September 14th, 2007 at 10:05 am and is filed under Mortgages.
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