Tracker mortgages are not clearly understood in Britain, says A & L |
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Published
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Mon, 12 Dec 2005 01:35
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LONDON - A new report published by the Alliance & Leicester Mortgages says that only a third of Britons are aware of what tracker mortgages are. The rest of them are ignorant of how a tracker mortgage policy actually works.
The study found that 58 percent of homeowners do not understand how a tracker mortgage affects their monthly bills. This means roughly 8.4 million people are ignorant of this particular mortgage.
"It is quite worrying to think that such a large proportion of homeowners are unaware of what a tracker mortgage is and how it could save them money on their monthly mortgage payments," commented Stephen Leonard, the director of mortgages at Alliance and Leicester. "Homeowners should ensure they fully understand what type of mortgage they have; they can then be financially prepared should their monthly payments rise."
Only about 34 percent of those surveyed were aware that the tracker mortgage rate is directly linked to the rate set by the Bank of England, while 17 percent actually thought that it was the FTSE 100 which decided what the tracker mortgage rate should be. 34 percent of males were aware of the correct definition of a tracker mortgage, while 27 percent of women were aware of the same.
"Tracker mortgages generally suit those who have a degree of flexibility in their budget and so stand to benefit from cuts in their monthly mortgage payments following a base rate cut, as well as afford any increases," Leonard said. He added that homeowners could be potentially missing out on a cheaper option by remaining ignorant of this provision.
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