This morning the Bank of England (BoE) has announced a cut of the base rate of interest to a staggering 0.25% in response to the foreseen economic upheaval of the coronavirus outbreak across the world. As the base rate is the BoE’s official borrowing rate, it will therefore influence what borrowers pay on their mortgages.
The decision to make the surprise cut was made when the BoE’s Monetary Policy Committee met on Tuesday of this week, with them quoting it as a response to the “economic shock” of the coronavirus outbreak and hoped it would “help to support business and consumer confidence at a difficult time, to bolster the cash flows of businesses and households, and to reduce the cost, and to improve the availability, of finance”.
This is the first cut to the base rate since 2016, when it was cut from 0.5% to 0.25%.
What does it mean for your finances?
Though not the best news for savers, but those with tracker mortgages and those looking to purchase or remortgage could be in luck with some mortgages getting cheaper.
If you are on a fixed rate mortgage it is best to check before jumping the gun and looking for another product. We are here to help you do that and have the very latest data and products to hand for any comparisons you wish to look at. However, being fixed (as the name suggests) will not change your rate during the term of the product, but any new fixed rate remortgage in the future could be cheaper now since the cut. As always, check with one of our qualified advisers to see the best course of action for you.
Those with Standard Variable Rates (SVR) may see cuts from their lenders though this is not a guarantee. SVR’s change at the discretion of the lenders, and our advice if you are on an SVR at any time is to shop around for a new product. Now is the absolute best time to do so. Give us a call and we will see what is available for you.
The best news comes for those on Tracker mortgages. As these products track the base rate an average £150,000 mortgage could see savings of around £35+ a month.
Whatever the impact and whatever your product it is highly advisable to act on this news and try to get a new product or deal while the going is the best it has been for a long time for borrowers.
What do you do now?
With mortgages rates of late already being attractively low the news today highlights – if you qualify for a new deal or product or are a first time buyer taking the plunge – NOW is the time to act. Call one of our advisers now on 01249 474952 and we will shop around for the best deal for you.
What are you waiting for?