Please explain tracker mortgage rates?

B

Bobby1

Registered User
Messages
128
Hi,

I am due to draw down my mortgage in about 3 weeks, I have it with EBS and I have looked at their fixed rates, well whats left of them! They have axed the 1yr, 2yr and 4yr rates.

How exactly does a Tracker rate work, I know it has something to do with the margin on the interest rate but thats about as much as I know!

Also who is the best provider in the market for them?
 
A tracker works on the principle that it holds at a fixed differential above a variable rate. the difference between the two rates dose not change but the variable rate moves. E.g the bank will charge you 0.95% above the current ECB rate. Therefore if current rates in the ECB are 3% the tracker rate is 3.95%. Then if ECB rates jump to 3.5% the tracker rate will move to 4.45%.

There are many variables on what differential above the ECB rate you will get such as LTV (loan to value) and are you a new customer and such.
 
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