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Tracker borrowers 'hit by rate increases'

Rates of tracker mortgages are on the up, a new study from mform.co.uk shows.

Researchers at the website found that some tracker rates have increased by 0.23 per cent - due, in part, to the tougher financial conditions stemming from the credit crunch.

Borrowers take out tracker products in times of falling interest rates - as the mortgages are designed to follow the base rate.

Conversely, when rates are raised fixed rate mortgages generally become more popular.

However, in the wake of the credit crunch, many lenders are refusing to pass on the Bank of England's two rate cuts over the past four months on their trackers, Reuters reports.

Marketing and business development director at mform.co.uk Francis Ghiloni said: "The Bank of England rate cuts are not feeding through to borrowers with trackers as lenders re-price.

"[We] argued that a 0.5 per cent rate cut this month [from the Bank] was the minimum that was needed to help both borrowers and lenders and our analysis shows that another cut is needed."

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