Halifax keeps on tracking

The Halifax this week fired the latest shot in the mortgage price war by unveiling a range of base rate tracker home loans it hopes will bring in many more customers and help it hang on to existing ones.

Britain's biggest mortgage lender certainly can't be accused of doing things by halves - all told, there are now no less than 19 tracker mortgages on offer. There is also a range of new three and five-year fixed rate deals starting at 6.75%.

With a tracker home loan, your monthly mortgage payments are linked to the Bank of England base rate (currently 6%) - when this goes up or down, so does what you pay. The rates on these deals are set a fixed amount above the base rate - typically between 0.75% and 1.5%.

Many people like the clarity and certainty this sort of deal offers - with a tracker, the rate you pay is guaranteed to shadow the movement of the base rate, so lenders can't wriggle out of passing on interest rate cuts. While the Halifax's decision to embrace the tracker concept is to be welcomed, Ray Boulger at mortgage broker John Charcol says that in general, the new product range is not as good as the old one.

The current two-year tracker deals for new customers and existing borrowers moving home - which range from 5.95% (0.05% below base rate) to 6.15% (0.15% above base rate) until October 31 2002 - and the new tracker deals for first-time buyers are less attractive than its previous discount rate deals.

But one product that does win Halifax a gold star is its new five-year tracker, where the current pay rate is 6.25% (0.25% above bank base rate until October 31, 2005) for people who can stump up a deposit of 25%-plus. Mr Boulger says this is "very competitive" and compares well with arguably the best penalty-free five-year discount on the market: Derbyshire building society's loan giving 1.45% off its standard rate for five years, giving a current pay rate of 6%. More details of the deals can be found online at www.halifax.co.uk.

This week also saw First Active launch a tracker mortgage available exclusively through Tesco Personal Finance. It has a 3% discount for six months, giving an initial pay rate of 4.25%, and after that you pay base rate plus 1.25%, guaranteed for the term of the loan.

Tracking also forms part of a new flexible mortgage on offer from Alliance & Leicester. There is a 1.9% discount off its 7.74% standard rate for one year, followed by a tracker rate guaranteed at 0.95% above bank base rate for 10 years.

Meanwhile, Abbey National says that worries about further interest rate rises could prompt many borrowers to think about the security offered by fixed-rate mortgages. This week it launched a loan fixed at 6.65% for three years, available to first-time buyers, home movers and remortgage customers.