Homeowners can now cap the maximim interest rate they could pay on a tracker mortgage.

The Coventry Building Society and the Woolwich now have a tracker that tracks the Bank of England’s base rate but also have guarntees that the interest rate on the mortgage will not be allowed to exceed a certain level.

Woolwich’s tracker is runs at 2.99 per cent above base rate with the maximum set at 5.99 per cent during the first 3 years of th mortgage. Coventry’s 3 year tracker is also set at 2.99 per cent above base but the maximim is capped at 4.99 per cent. This means that on a typical £150,000 mortgage the maximum monthly repayment with Woolwich tracker would be £966 and £876 with the Coventry.

But there are cheaper trackers available. 2.99 per cent over base is relatively high. For example, First Direct has a lifetime tracker at 2.39 per cent over base and HSBC has one at 2.89 per cent.

If you are looking for the securioty of a fixed rate mortage consider HSBC’s 2 year fixed rate. If you had a 40 per cent deposit the rate would be just 2.89 per cent. But watch out, you’d have a starting fee of £1,499.