In October 2007, the average rate on a tracker mortgage stood at 6.23 per cent. Today it stands at 6.27 per cent. But over the same period the MPC has cut the base rate from 5.75 per cent to 4.5 per cent.
Commenting on the figures, Michelle Slade, analyst at Moneyfacts.co.uk, said:
"Despite the best efforts of the Bank of England to bring borrowing costs down, lenders just aren’t passing the cuts on to consumers, either on the mortgage front or on other aspects of finance, including business.
"Since the 0.50 per cent cut at the beginning of the month, numerous lenders have announced cuts in their tracker rates. However, with all the increases during the last year, borrowers are in no better position than they were a year ago.
"Next week the Monetary Policy Committee (MPC) meets again and many commentators are predicting a further cut in interest rates, but it is hard to see what influence this and future MPC decisions will really have.
"Base rate used to be a major barometer when determining mortgage rates, but it could become an obsolete component of a mortgage if lenders do not pass cuts on.
"Lenders are factoring in a much bigger margin for risk than ever before and as a result mortgage rates remain high. The last time base rate was 4.50 per cent, borrowers could have obtained a rate of 4.25 per cent on a two-year tracker. Today the best rate on offer is 5.99 per cent.
"If base rate continues to be cut, many borrowers could find that their rate is collared at a higher level. Some building societies have limits below which they do not pass the base rate on to both new and existing customers. These include:
• Nationwide BS - all trackers collared at 2.75 per cent plus margin - i.e. if base rate drops below 2.75 per cent, your mortgage will stay at 2.75 per cent plus loading/margin
• Chesham BS – discounts and trackers collared at 3.50 per cent
• Skipton BS – Trackers collared at 3.00 per cent
"As the rates that deals are collared at are quite low, they haven’t been implemented in quite some time. However, if base rate continues to be cut, we could see more lenders introducing them."
