It is no surprise that The Bank of England have voted today to cut interest rates from 4.5% to 4.25%. It has been heavily predicted in the market that there would be a rate cut. If you are a mortgage borrower the impact depends on the type of mortgage you have.
Variable or Tracker mortgage
If you are on a variable rate lenders don’t always pass on the rate cut it will depend on your terms and conditions.
If you have a tracker mortgage, it means your mortgage interest rate is likely to fall meaning lower monthly repayments.
Fixed rate mortgage
If you are on a fixed rate deal your monthly payments will not change. However a base rate cut is positive news and when your fixed rate deal is coming to an end there maybe better deals available to you.
Remortgaging
A base rate cut is good news for borrowers looking to remortgage. However, we are in very uncertain economic times globally and lenders have already been reducing fixed rate mortgages over the last 2 weeks. It is difficult to predict if there will be any more rate reductions in the short term.
First time buyers and Home Movers
Lenders often reduce their mortgage deals after a rate cut however as previously mentioned lenders have already been reducing fixed rate mortgages over the last 2 weeks.
Some lenders have been easing their affordability rules to allow people to borrow more money as well as reducing their fixed rates, this is good news for First Time Buyers and Home Movers.
Where do rates go from here?
I would not expect to see a rate reduction from lenders straight away but, I would not rule out more reductions in the coming months. There is a general trend of caution amongst mortgage lenders with the general uncertainty in the global economy.
If you have any questions and want to speak to me please feel to contact me on 0777 587 4126 or email me on daniel@middletonfinance.co.uk
The information contained within was correct at the time of publication but is subject to change.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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