Why does my fixed rate tracker monthly interest fluctuate month by month?

ManchegoMan

Hi,

My HSBC mortgage is a capital repayment fixed rate tracker (3.29% above BOE base rate). However, my annual statement shows that the interest applied each month fluctuated up and down throughout the year. For example on month 2 it was £884, month 3 £848, month 4 £902 as a rough example.

I thought the interest would decrease slowly each month over time as capital is also paid off every month so I don't understand why some months the interest amount increases more than other months. The BOE interest rate has remained unchanged during this period.

Please can someone explain and resolve my 'senior moment'

Thanks.

shop-to-drop

Different number of days in different months varying from 28 to 31 this means the interest fluctuates.

kingstreet

... and interest is payable in arrears, so you'll see a lag in the way it changes.

For example, your February interest would be the smallest amount in the year, but would not show until the March payment.

ManchegoMan

doh! cheers guys. It all makes sense now.;)

amnblog

Everyone wants to be an actuary.

An Actuary is an Accountant who found accountancy too exciting.