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Consumers warned about tracker rate mortgages
Thu, 20 Jul 2006
Moneyfacts, the personal finance information website, has said that homeowners with variable rate mortgages should not necessarily feel their interest rates are "safe" because the base rate has remained unchanged for almost a year.

It says that customers with some banks and building societies will see their standard variable rates (SVRs) increase by as much as 0.25 per cent.

The company calculated that payments could increase by £31 per month for average mortgages of £150,000 over 25 years, simply by raising the rate by 0.25 per cent.

Darren Cook, Moneyfacts' head of mortgages, stated: "[Discounted] rates can also be impacted by internal bank decisions, as the rate is normally discounted from the lender's own SVR."

"While lower rates can currently be found on discounted mortgages, it is worth remembering that to some extent you are at the hands of the lender as to whether this rate fluctuates," he added.

Mr Cook concluded that the mortgages market had increased in complexity and that it could be worth taking the time to find independent advice.

New data from the Council of Mortgage Lenders has revealed that gross lending for mortgages hit a new record in June, reaching £32.2 billion.

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