Tracker mortgage holders could benefit from an interest rate drop.

Tracker mortgage holders could be set to benefit from an interest rate drop.

Last week Christine Lagarde head of the IMF called for the BoE to do more, including reducing interest rates to stop the UK economy from stagnating.

The IMF has recommended that the BoE put new money into the UK economy and cut the base rate which could have implications for mortgage holders.

While those with a fixed rate mortgage could miss out on any benefit those with a tracker mortgage could end up paying pay less, however this depends on the terms of the mortgage holders deal.

Most trackers are linked to the BoE base rate so any interest rate reduction should mean a reduction in tracker mortgage rates. However some home-owners on trackers may have a 'floor' or 'collar' below which their rate will not fall.

For example the Yorkshire BS has a 2 year tracker at a rate of 2.59% plus base with a 'collar' of at 3.09%. Therefore mortgage holders on this deal would not see their rate reduce even if the base rate drops below 0.5%. While home-owners on this deal will not benefit from further reduced rates they are on a good deal.

Deal Direct recommend that all tracker mortgage holders review their original offer to check the terms agreed to see if they could benefit from an interest rate drop.

Base rate trackers currently remain an attractive mortgage option whether or not interest rates fall further.

For those willing to take the risk the base rate will remain low into 2016 as currently predicted, contacted Deal Direct for a competitive offer.

Contact Deal Direct for a mortgage market comparison.