There has been a mixed reaction from the UK\u2019s mortgage experts following the Bank of England\u2019s base rate cut, with industry commentators predicting that the reduction may not mean cheaper mortgages, despite the Governor insisting banks have \u2018no excuse\u2019 not to pass on the rate drop to borrowers.<\/p>\n
Lenders \u2013 including Barclays, Santander, Coventry Building Society and NatWest \u2013 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.<\/p>\n
CML director general Paul Smee said: \u201cAround 50 per cent of borrowers are currently on fixed rates and will therefore see no immediate impact on their payments\u2026 Of the remaining 4.9 million homeowners with a variable-rate mortgage, over 1.5 million have a tracker rate mortgage \u2013 these borrowers may automatically see a rate reduction depending on their mortgage contract, but some will have a \u2018collar\u2019 or lower floor below which rates cannot fall.\u201d<\/p>\n
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.<\/p>\n
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.<\/p>\n
By having access to the whole lending market, rather than being tied to an individual lender\u2019s products, allows our clients greater flexibility and incredible choice \u2013 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 \u2013 which can save a lot of time and administration.<\/p>\n