Trackers were still a major topic in various weekend mortgage articles, following a further cut to the Bank base rate on Thursday. The Mail on Sunday noted that trackers are ‘safe as houses’ and that borrowers due to remortgage and first-time buyers are being urged to shun fixed rate deals in their favour, as interest rates look set to stay low and could fall even further. However, the Daily Telegraph revealed that in many cases homeowners have discovered that they don’t have a tracker mortgage at all. Their mortgage only tracked the base rate until it fell to a certain level (known as a floor or collar) and they will get no further benefit from rate cuts. To add to this, the Financial Times suggested that occasionally, standard variable rates are cheaper than new mortgage deals. The Sunday Times described how up to 1m borrowers with offset mortgages have been warned that today’s low interest rates could in some cases negate the benefits of setting their savings against their loans. Reportedly, some homeowners who took out highly competitive tracker offset mortgages a year or more ago may find that they are paying such low mortgage rates that they might be better off moving their savings to a separate account.
Elsewhere, the Mail on Sunday looked at the benefits of making overpayments towards a mortgage and experts agreed that it makes real financial sense to overpay when possible. Following the recent rate cuts, borrowers are urged to resist the temptation of lower payments and to maintain their existing payments, in order to save interest and repay the mortgage early.