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Tracker mortgage packages return to favour

While it is very difficult to find a mortgage Tracker fund with the same terms and conditions as those seen just a few weeks ago, the reduction in the UK base rates has seen many mortgage providers return to the market with a headline low interest-rate figure. However, this does not hide the fact that many mortgage lenders in UK have doubled their profit margins on these deals by increasing the actual mortgage rate to 2% above the base rate at any given time.

It seems as though in the short to medium term, the UK mortgage lending industry will see if more and more applications for these higher than normal profit margin products. Even though base rates are currently 3.5% and looking to move down in due course, the mortgage lenders are already suggesting that any rate cuts after today will not see an automatic reduction in their own headline mortgage rates. Quite how they can justify this to the government, in light of the rescue package and the terms and conditions, remains to be seen.

Just as the last base rate argument is starting to die down it seems as though we may have another on our hands as UK base rates look likely to fall further in the short term.

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