Tracker V standard variable

B

Breaker

Registered User
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Hi,

Can anyone explain to me the difference between a tracker mortgage and a standard variable?
I know a tracker mortgage is typically 1-1.1% above the ECB rate. But what what benefits does a standard varibale give over a tracker mortgage?
Surely when the ECB raise/lower interest rates the banks will just increase their varibale rate or not be so quick to reduce their standard variable rate (in the event of an ECB decrease). Yet standard variable rates (if i am not mistaken) are generally more expensive than tracker mortgages?
Surely tracker mortgages win hands down everytime? (or am i missing something?)

Thanks for your help.
 
Hi Breaker, welcome to AAM. I've deleted the other (incomplete) post, so have removed the '2nd attempt' bit from the title of this one.

In a word, no — you haven't missed anything. Unless a lender's variable rate is lower than their tracker rate, the tracker wins hands down. The only exception to this would be if you particularly wanted/needed to avail of a discounted rate for the first year or two (which many lenders offer to new customers), or if you needed more than a 90% mortgage — but over the life of the loan, the tracker is still likely to be better value.

Trackers weren't as widely offered back when this forum's was originally written, which is why they're not mentioned there, but if you look at the relevant key post in the best buys, you'll see that that's now changed — arguably due in large part to BoS's entry to the market a few years ago.
 
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