London (shakespearefinance) January 28, 2007: Tracker mortgages have soared amid expectations that the monetary policy committee of the Bank of England interest may reduce the interest rates from prevailing 5.5% to 5% or lower by this summer. Borrowers are opting tracker mortgages that are linked to the Bank of England base rate.

The top three mortgage products sold so far in January at mortgage broker firm John Charcol were all bank rate trackers with no early repayment charges. There is a lot of uncertainty in the financial markets and people are expecting interest rates to fall, pushing down fixed-rate mortgage deals. Nationwide, the Britain's largest building society and fourth largest mortgage provider, has raised its tracker rates for new borrowers between 0.05% and 0.15%.

Matthew Carter, divisional director for mortgages at Nationwide commented on the increase in its tracker rates by saying: “The costs of funding remain high and we have found it necessary to follow other lenders who have recently increased their rates.” The cheapest Nationwide trackers are now priced at 5.53% for house purchases and 5.63% for re-mortgages, both with a £1,499 fee.

Andrew Hagger, head of news at price comparison site Moneyfacts.co.uk, said: “Although tracker rates are creeping as lenders look for an increased margin, with the high level of uncertainty in the market at present and with the potential of further rate cuts to come this year, these types of mortgages are still worth considering.”