Research conducted by A&L showed 58 per cent of UK homeowners do not understand how a tracker mortgage affects monthly payments with 17 per cent believing monthly payments are linked to the FTSE 100 index.
A further 4 per cent believed trackers meant monthly payments would be fixed. Only one-third of UK homeowners were aware tracker mortgages are linked to the Bank of England Base Rate.
Stephen Leonard, director of mortgages at A&L, was concerned consumers may be losing out as a result of this misunderstanding.
He said: “It is quite worrying to think such a large proportion of homeowners are unaware what a tracker mortgage is and how it could save them money on their monthly mortgage payments.
“While it is understandable there are more non-homeowners who got the answer wrong, this includes those who are looking to get onto the property ladder in the near future,” he added.
Harry Katz, principal at Norwest Consultants, was surprised the figures were so low with customers increasingly opting to go straight to a lender, ignoring broker advice.
Katz said: “I’m amazed the figures are so modest. This once again highlights that in the never-ending marketing quest lenders and others in financial services lose sight of the customer proposition.”
The research also indicated 61 per cent of 30 to 39-year-old first-time buyers were unaware what a tracker mortgage was.
