There has been bad news this week for mortgage borrowers on variable rate or tracker mortgages. These up to now lucky few, who are currently paying some of the lowest interest rates in history, face a dramatic rise in repayments when their introductory deals end over the next few months.

Tracker mortgages are those whose interest rates rise and fall in line with the Bank of England’s official rate. Before the credit crisis, many borrowers took them out when they charged very small margins above Bank Rate. A small number of people were even charged a margin below Bank Rate.

Luck, however, does not last forever. Most tracker deals last for only two years before the rate reverts to the lender’s normal rate, usually called the standard variable rate (SVR), and a more realistic reflection of the lender’s costs.

Many people who took advantage of the best short-term tracker deals just before the financial crisis began two years ago are about to see their interest rates revert to much higher SVRs.

Standard variable rates are set at the discretion of the lender. In more normal times they usually rise and fall in line with the Bank of England’s rate, but in today’s disrupted markets there is huge variation.

The people whose monthly mortgage payment is about in increase naturally enough now want to know how to find another deal that keeps it low.

The best advice from experts is that people who are now paying next to nothing for their mortgage should consider either saving the windfall or overpaying their mortgage. Don’t become accustomed to the lower repayments.

Borrowers whose loans are about to revert to SVR are also advised to check when the tracker incentive comes to an end and what the follow-on rate will be. In many cases the mortgage will revert to the lender’s standard variable rate, but other deals may even revert to an ongoing tracker rate rather than the SVR.

Alliance & Leicester and Woolwich deals often move onto another tracker. These can be extremely favourable compared with the higher-margin deals of the current market. 

The other key factor is the equity in the property. Those in the best position will have more than 25pc equity and be able to search for the best deals.

Those with little or no equity will have few options. They will either need to stick with their lender’s SVR, which may represent a good ongoing variable deal anyway, or, if they would like to lock into a fixed rate, they should see what deals their lender may have.

With indications from the Bank of England that rates will stay low for a while, a tracker might be a better option than a fix for those switching from a high SVR.

Whatever option borrowers decide on it should be noted that the most important advice is not to stick your head in the sand and ignore the approaching end of the original tracker deal. Acting now will avoid the stinging financial pain caused by a sharp hike in monthly repayments.

While house price figures continue their tentative growth, at the opposite end of the market repossession figures are still proving worrying. 

The number of homes repossessed in the UK fell 10% in the second quarter of the year compared with the previous three months, lenders say. However, the Council of Mortgage Lenders (CML) has pointed out that the 11,400 homes repossessed was a rise of 14% compared with the same period the previous year..  

The group said early advice for struggling owners, low interest rates and tolerant lenders were helping. But rising unemployment could soon leave more householders in difficulty.  

Low interest rates also meant that the number of homeowners falling behind with their mortgage payments had also levelled off.  

The number of home loans with arrears of more than 2.5% of the mortgage balance in the second quarter of 2009 was 205,600. That compared with a total of 203,900 at the end of the first quarter, and 139,700 at the end of the second quarter of 2008.  

However, separate figures from the Ministry of Justice gave a hint of a future rise in repossessions in England and Wales.  

The number of repossession actions started in the courts bounced back in the second three months of the year, rising by 10% compared with the first three months of the year to 26,419. The number of repossession orders granted by judges also rose over the same period, up 16% to 19,123.  

Homeowners can still negotiate with their lender at this stage of the process to stay in their home. Nearly half of these repossession orders, 46%, were suspended as judges allowed borrowers to negotiate a deal with their mortgage lenders. Warning 

The CML also sounded a note of caution about the coming months, although it suggested the figures showed that lenders were not aggressively seeking to throw people out of their homes.

The CML recently reduced its estimate for repossessions in 2009 by 10,000 to 65,000 homes in the UK. But homeless charity Shelter has warned of a second wave of home repossessions when interest rates rise.  

It said that rising unemployment would also add to the risk of homeowners being unable to make their regular mortgage repayments in the coming months.  

Shelter has called on lenders always to consider allowing homeowners in arrears to move their mortgage from high fixed-rates onto low variable rates, while waiving any redemption penalty charges.  

The CML and the government believe that free advice to those who have fallen behind with mortgage payments, and “last-gasp” advice in repossession courts, have allowed many people to stay in their homes.  

However, more complicated projects such as the scheme to allow people to sell their homes to housing associations and live in them as tenants have had a slow, almost negligible start with the number of beneficiaries still in single figures. 

The ugly repossession figures contrast with house price rises in exactly the same way that rising unemployment figures contrast with a slowed economic decline and move towards recovery. Both have the same time lag and are, indeed, intimately related. It is for this reason that long after parts of the economy are once again functioning properly the spectres of unemployment and repossession will hang over the British economy.