What is the difference between a Standard Variable Rate (SVR) and a tracker rate?
Each lender decides what SVR they will charge. Although this is set taking account of interest rates generally and based on how competitive they want their SVR to be with other lenders, it is not specifically related to any other interest rate. And, although lenders normally change their SVR as a result of Bank Base Rate changes they don’t always change them by the same amount. When Bank Base Rates dropped from 0.5% from 5.5% to 5.0% in 1999 most lenders only reduced their SVR by 0.1%. Mainly as a result of this tracker rates have become more popular and many lenders now offer at least one tracker mortgage. A tracker mortgage is simply a mortgage that tracks an independently set interest rate, usually Bank Base Rate but sometimes the LIBOR rate. (LIBOR stands for London Interbank Offered Rate and it is the rate at which banks lend to each other.) The benefit of having a tracker mortgage is that you are guaranteed that any falls in interest rates will be passed on to you. Tracker mortga
