Margins triple on tracker mortgages

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Figures from comparison website moneysupermarket.com show that in October, when official rates set by the Bank of England were 5%, the average rate on new tracker mortgages was 5.76%, giving a margin of 0.76%. Interest rates have since fallen to 1.5% but average tracker rates have only been cut to 3.86% — giving a margin of 2.36%.

Louise Cuming, who is head of mortgages at moneysupermarket.com, said that while mortgage rates appeared low, borrowers could run into trouble if and when interest rates start to rise again.

"New trackers have become the ultimate handle-with-care mortgage with bank margins now at a dangerous level for borrowers," she said. "If the Bank of England's historically low rate triggers a savings or currency crisis and it is forced to increase rates, today's new tracker customers will be left sorely exposed."