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If you have a tracker mortgage, you might think you are in luck right now as rates have plummeted to just 2%.

The Bank of England slashed rates again by 1%, making them the lowest they have been since 1951 – but it might not be good news for tracker borrowers.

Although trackers are supposed to follow the base rate, not all of them are anymore for two reasons.

The first is that because of the credit crunch, the rate at which banks lend to each other and raise money, called Libor, is spread way beyond base rate – by almost 2%. This means the mortgage is really following Libor rates, not base rates – which right now are at around 4%.

The second reason is that not many lenders ever considered Bank base rate to ever be this low – it hasn’t been this low very many times since 1694 – so their tracker ‘floors’ are being enacted. Some trackers have lowest limits, around 2% and 3%, but this was never really mentioned as it wasn’t likely base rate would fall past the ‘limit’.

But now it has, so some trackers will stop racking once they hit their ‘floor’. If you are unsure of how your tracker mortgage may react, talk to your adviser today.

To keep up with the latest news and comments on the mortgage market please visit the Mortgage Broker Blog.

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The mortgage lending industry has hit out at the Government for not doing enough to help the current mortgage problems.

Council of Mortgage Lenders director general Michael Coogan said the Chancellor and the Prime Minister’s repeated calls for base rate cuts to be passed on as “short-sighted and counter productive”.

He says: “Although a small percentage of borrowers may have short-term benefit, this disregards the larger number of savers on fixed incomes dependant on their investment returns.”

The CML also hit out at the Government’s previous statement that lenders should be lending at 2007 levels: “Can this downward trend in the last 12 months be reversed so that we reach 2007 levels of lending next year as the Government has insisted? The simple answer is no.”

The group said the Government also has to do more to help the mortgage industry, and as yet has been too slow to react to problems in the industry.

Coogan added that the regulator, the Bank of England and the Treasury need to ignore self interested decisions and work together to help the UK come through this mortgage drought. He says if this does not happen the country will fall into a deeper recession than expected.

To keep up with the latest news and comments on the mortgage market please visit the Mortgage Broker Blog.

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Mortgage lending dropped in October, with approvals for loans down almost three-quarters.

The Bank of England revealed that October mortgage approvals dropped by 74% since October 2007 – only 32,000 mortgages were approved. Mortgage lending was down by £0.5bn on the September figures.

Ross Bowen, managing director of Connells Survey & Valuation, says: “It looks like we’re reaching the floor on falling transactions. Many lenders have kitchen-sinked bad news, and now they’re lending at fairly steady –though significantly reduced levels.”

If we are reaching a floor to the downturn that’s a good thing – it means lending may begin to turn, it may mean house prices will fall less and it means everything will very slowly return to normal.

Regardless of the figures, good and bad, if you want to get hold of a mortgage you need to make sure your finances are in order. If you are waiting for house prices to reach a floor, don’t let things side. Pay your bills, keep your debts down and make sure you know all that is coming in and going out. If you do that, when the market is more favourable you will be at the front of the queue.

To keep up with the latest news and comments on the mortgage market please visit the Mortgage Broker Blog.

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Forty per cent of people think that rates will rise in 2009, regardless of speculation of further cuts.

The Lloyds TSB Corporate Markets Consumer Barometer for November showed that consumers are preparing for interest rates to rise next year, despite market speculation that rates could drop below 1%.

The survey of 2,000 consumers found that 40% of consumers believed interest rates will be higher next year and the balance of those expecting higher, rather than lower, rates remained at unchanged from October.

Trevor Williams, chief economist at Lloyds TSB Corporate Markets, says: “This will be of concern for the high street because, even with easing price expectations, if consumers remain dubious about the prospect of lower rates, they could hold off on their spending.”

If you are one of the 40% then maybe you need to consider a fixed rate mortgage – locking in a rate now will mean you are safe if your grim prediction comes true.

Of course, if you side with the other 60% then maybe you should think about a tracker mortgage. More rate cuts should mean lower trackers in 2009.

Whatever you predict, its best not to wait around to see if it comes true. Talk to a mortgage adviser today and tell them about your fears and hopes and get their opinions. Hopefully between your thoughts and theirs, you will come to the best decision possible for you.

To keep up with the latest news and comments on the mortgage market please visit the Mortgage Broker Blog.

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House prices across the UK began to slowly shallow out in November as the Nationwide revealed prices fell by just 0.4%.

This could be the beginning of a better period for UK homes as the possibility of a bottom begins to emerge.

The annual rate of fall moderated to just 13.9%, down from October’s year-on-year drop of more than 14%.

Nationwide says the price of a typical house is now £158,442. It says this is about £25,000 less than this time last year, but is still about £25,000 higher than in November 2003.

The building society, which does its House Price Index every month based its own mortgage sales, says poor economic conditions will continue to put pressure on the housing market, but hopefully continued deep interest rate cuts will provide support for borrowers.

Fionnuala Earley, chief economist at Nationwide says: "In spite of the moderation in house price falls recorded in November, with the economy in recession, conditions do not appear very favourable for a swift recovery in the housing market. The labour market is weakening, which will inevitably hinder market demand, particularly when property remains expensive relative to earnings. With prices falling at their current rate there is also little incentive for new borrowers to hurry into the market.

“However, there are a number of measures which should provide some support to the market in general and help existing and potential homeowners in these difficult times.”

To keep up with the latest news and comments on the mortgage market please visit the Mortgage Broker Blog.