Some mortgage holders who believe their tracker rate is pegged to the Bank of England base rate could be in for a nasty surprise.

While most trackers are indeed directly linked to the base rate, this is not universal. Major lenders such as Barclays and NatWest have the option to raise costs even if the base rate holds.

The news this week that Manchester Building Society is raising rates for many tracker customers who took out mortgages in 2004 or earlier shows how lenders are able to use special clauses to increase costs.

Mortgage experts aren't predicting a sudden surge in other lenders' tracker rates for existing borrowers. But nevertheless, homeowners should be aware of the exact terms of their contract, in case the worst happens.

Many tracker mortgage customers have enjoyed record low rates as the base rate has been at 0.5% for over three years. Most economists expect it to remain that way for many more months, if not years.

Lenders, such as Manchester, admit they are losing money as many borrowers are on rock-bottom monthly payments.

Trackers up

Manchester cites a condition in many contracts which it claims allows it to vary rates after five years.

So some borrowers will pay 4.74% instead of their current 0.99% rate, adding £270 a month, or £3,230 a year, to costs on a £150,000 repayment mortgage with 15 years remaining.

The rises are being phased in over two years.

Manchester is a small lender, but other giants have potential get-out clauses too.

Bank of Scotland, Barclays and NatWest trackers are all pegged to each bank's self-determined 'base rate', such as the 'Barclays Bank base rate'.

While none of the trio's rates have ever deviated from the Bank of England base rate, the lenders nevertheless have the option to change them.

And it is not as though lenders are shy at raising costs in a sterile rate environment.

Bank of Ireland, Clydesdale/Yorkshire, Co-op and Halifax banks have all announced their intention to raise their standard variable rate this year, which most mortgages revert to after an introductory period. Some RBS rates are also rising.

David Hollingworth, from broker London & Country, says: "We are not worried about lenders such as Barclays and NatWest raising tracker rates, but borrowers need to understand their deal won't necessarily be linked to the base rate."

Some borrowers on a sub-prime mortgage, for those with poor credit histories, could also be on a tracker linked to the Libor rate, which is used to determine the cost of funds when banks borrow from each other.