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Tracker mortgages not the best deal, says moneysupermarket.com

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Although many lenders have made tracker mortgages more appealing over the past week by raising the interest on their fixed-rate deals, moneysupermarket.com has urged borrowers to check the true costs .

Tracker mortgages are currently seeing better headline interest than fixed-rates, but research by the website has shown that a two per cent increase in the base rate would lead to sharp rises in repayments .

A customer holding a tracker mortgage of �300,000 with base rate plus 2.81 per cent interest would currently pay �121.33 a month less than one with a fixed-rate .

But a two per cent rise from the Bank of England would mean a tracker borrower would be paying �133.11 more than if they were on a fixed-rate package.

Louise Cuming, head of mortgages at moneysupermarket.com, said: Borrowers should not be seduced by the opportunity to make short term savings by opting for a tracker mortgage deal .

The Co-operative Bank recently unveiled a tracker mortgage which offers 2.39 per cent interest for the first three years and it has been a big hit amongst homeowners, according to the company.

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