No base rate increase would mean the best mortgage deal is likely to be a tracker

IF there is no base rate hike likely until 2016, the best mortgage deal currently on offer is likely to be a tracker. The Centre for Economics and Business Research has predicted that interest rates will stay at low levels until 2016 unfortunately many others disagree. In 2009, rates were slashed to 0.5% in an attempt to stimulate growth, and looking at the present state of the economy the CEBR believes it could be a further four years before rates will rise.

For some mortgage borrowers low interest rates are good news and this is especially true for home-owners on trackers. While the Bank of England base rate remains at such an historically low level, trackers are likely to be the best mortgage deal to be on.

A low interest forecast is not good news for all mortgage borrowers however. The CEBR predicts that economic growth is likely to stay low, while UK unemployment is likely to rise to around 3,000,000 by summer 2013. Some borrowers will lose their job and struggle to meet their monthly mortgage repayments. As mortgage rates inch up amid fresh credit crunch warnings, borrowers may want to consider whether now is the time to make their move a new deal.

Tracker mortgages, following the Bank of England base rate, are coming into their own with more borrowers believing they are currently the best mortgage deal on offer. Those on standard variable rates of 4 per cent and above who have equity in their home, may want to consider moving to an early repayment, charge free, life-time tracker. This could reduce a home-owner's monthly repayments and ensure their mortgage rate will only rise when base rate does.