Interest Rate Cuts & Lower Mortgage Payment
Why an Interest Rate Cut May Not Make Your Mortgage Cheaper…
Malcolm Davidson – Mortgage Broker
With interest rates having being stable at 0.5% for over 7 years, the Bank of England’s decision this week to leave them alone yet again would normally hardly make the News bulletins – but with the current economic uncertainty and previous predictions of a cut, interest rates are a talking point again.
An interest rate cut may well follow in August once the markets have settled and the impact of Brexit becomes known but interestingly this may not have any effect on your mortgage at all. If you have a base rate tracker product then your monthly payments will indeed reduce – but if you are sitting on your Lender’s standard variable rate then it’s entirely up to them whether they pass any rate cut onto their mortgage customers.
In fact, when interest rates were tumbling in 2008 several Bank of England rate cuts were not passed down the line.
There is quite a marked discrepancy between the Bank of England’s base rate of 0.5% and Lenders’ standard variable rate mortgages. For example, the Leeds Building Society’s variable rate is currently 5.69%.
An interesting question I’m getting a lot at the moment is whether now is a good time to remortgage and fix and take the plunge to come off a low variable rate mortgage.
Only time ever tells the answer to this question, however what I can safely say is that the fixed rates currently on offer are probably the lowest in history so in that way fixing now does sound like a good idea.
Of course you could end up kicking yourself if better deals become available in a month or two’s time but with rates this low lots of people at the moment are deciding to lock in at these historic lows.
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