There has been a mixed reaction from the UK’s mortgage experts following the Bank of England’s base rate cut, with industry commentators predicting that the reduction may not mean cheaper mortgages, despite the Governor insisting banks have ‘no excuse’ not to pass on the rate drop to borrowers.

Lenders – including Barclays, Santander, Coventry Building Society and NatWest – have already signalled they will pass the cut onto their variable rate borrowers, with more expected to follow, however, the Council of Mortgage Lenders (CML) says it depends on individual lenders whether the rate cut will affect mortgage rates and that the base rate cut will not mean universally cheaper mortgages, even for those on variable rate loans. However, existing mortgage holders on tracker rates will automatically benefit from the first interest rate reduction for seven years.

CML director general Paul Smee said: “Around 50 per cent of borrowers are currently on fixed rates and will therefore see no immediate impact on their payments… Of the remaining 4.9 million homeowners with a variable-rate mortgage, over 1.5 million have a tracker rate mortgage – these borrowers may automatically see a rate reduction depending on their mortgage contract, but some will have a ‘collar’ or lower floor below which rates cannot fall.”

Since the last change in official rate in March 2009, the average mortgage rate has already fallen from 3.8 per cent to 2.9 per cent.

Those looking to move home or remortgage will now be able to take advantage of increased competition in the lending market and it is an excellent time to talk to Steve Padgham to find out how The Financial Planning Group can help you secure one of the many low-rate deals available.

By having access to the whole lending market, rather than being tied to an individual lender’s products, allows our clients greater flexibility and incredible choice – they are often amazed that, in many cases, we are able to arrange a new, lower rate deal, without them having to go through the lengthy re-application process – which can save a lot of time and administration.

If you would like to speak to Steve about your own mortgage or remortgage circumstances, and have him calculate what deals would suit you best, please feel call him on 0800 731 7614 or email

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