After weeks of speculation, the Bank of England finally reduced the base rate.  What was 0.5% is now 0.25%.

Now that we are post-Brexit, there is a lot of confusion in what will happen to the economy and there are already signs of it shrinking.  In order to stimulate activity, the Bank of England have put in a number of measures, including yesterday’s announcement.

How does this affect the mortgage market, I hear you say?

Well, the BoE want to make sure that this is passed on to borrowers, so we might see even better fixed rates and variable rates for new borrowers, although my personal opinion is that this has already been pre-empted by many lenders who have already cut their fixed rates and, in some cases actually increased tracker rates.  It seems to me that mortgages have never been cheaper (although being ancient, I can remember rates of 16%.  Ask your parents!).  Some lenders use these rates in order to assess how much they will lend a client, so might be looking to be a bit more generous here too.

For those of us who already have a mortgage, it’s going to be one of three things.

  • Those of us on Base-Rate trackers can feel very pleased with themselves, because their monthly payments will be reducing in line with the Base Rate. Having said that, it might be worth keeping the same payment amount.  This means that you will be able to reduce what you owe, decrease the term of the mortgage and a chunk off of the total interest that you pay.

 

  • For those on a discounted rate, I’m afraid you’ll have to wait and see what your lender does with their Standard Variable Rate. Hopefully it will go down in line with the Base Rate.  If you’re still on the lender’s Standard Variable Rate…WHY?  Come in and see me, so that we can look at options to make your life a lot  easier.

 

  • For those on a fixed rate, trying desperately to smile as they see the new rates, I’m afraid you’ll have to wait until you re-mortgage to see if there is any benefit. In a few cases there is a good reason to go for new rate, but you need to check to see if there are any huge early redemption charges.  Let me know if you have any questions about this.

Interesting times eh?

Here’s a thing.  Catch-phrases, we all need a catch-phrase, so here’s mine (feel free to repeat after me)

”your home may be repossessed if you do not keep up repayments on your mortgage

Catchy eh?

 

On other (slightly more important) matters, Forest Green are playing their first game of the season tomorrow.  It will be great to see Mark Coopers new team play their first competitive game.  I have high expectations!  Main problem is that we’re at a wedding tomorrow, so I’m going to have to find time to sneak away to listen to it.  Fine, no-one will notice, what’s the worst thing that can happen?

Have a great weekend

 

Steve

Base Rate Changes