Average tracker mortgage rates hit new low

Tracker mortgages have never been so cheap.

Figures from the latest Moneyfacts Mortgage Trends report show that average tracker rates are continuing to fall.

For the eighth straight month the average rate charged on a tracker mortgage has fallen, this time down from the 2.66% rate recorded in August to 2.62%.

It's a new record-low average rate. But is that reason enough to plump for a tracker?

Tracker mortgages: pros and cons

First, let's start with the plus points. Tracker mortgages are currently seriously cheap, meaning your monthly repayments are lower than if you go for a fixed rate mortgage.

And with Base Rate only expected to increase slowly when the Bank of England finally decides to increase it from its current record low, chances are they will remain good value for money for a while yet.

That said, they are a gamble. Nobody truly knows what will happen with Base Rate; it could increase much faster than expected, meaning your monthly repayments start to hurt. and that's another thing - Base Rate WILL rise. By going for a tracker mortgage, you are signing up to a mortgage that you know will get more expensive, potentially within a matter of months.

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Cheapest two-year trackers

We know that the average tracker rate is at a new low, but what about the market-leading deals? What rates can you expect with those?

Here’s a look at some of the cheapest two-year tracker mortgages. They do tend to come with mammoth product fees though, so I’ve included a couple of mortgages with lower product fees to give you an idea of what you can expect if you don't want to shell out on a massive arrangement fee.

Lender	Interest rate	Maximum loan-to-value	Product fee	Early repayment charges	More Information
Tesco Bank	1.50% (Base Rate plus 1%)	60%	£1,495	2% until 31/10/2016	Apply here
TSB	1.54% (Base Rate plus 1.04%)	60%	£1,995	3% until 301/11/2015, 1.5% until 30/11/2016	Apply here
Chelsea Building Society	1.84% (Base Rate plus 1.34%)	60%	£475	1% until 31/10/2016	Apply here
TSB	1.59% (Base Rate plus 1.09%)	75%	£2,395	3% to until 2015, 2% until 30/11/2016	Apply here
Nationwide	1.69% (Base Rate plus 1.19%)	70%	£999	N/A	Apply in branch
Chelsea Building Society	2.14% (Base Rate plus 1.64%)	75%	£475	1% until 31/10/2016	Apply here
TSB	2.19% (Base Rate plus 1.69%)	80%	£1,345	3% in year one, 2% in year two	Apply here
Tesco Bank	2.25% (Base Rate plus 1.75%)	80%	£995	2%	Apply here
Newcastle BS	2.35% (Base Rate plus 1.85%)	80%	£498	3%	Head to our mortgage centre

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