Last week saw Team GB breaking records in Rio and back home, Team MPC were busy setting records of their own.
The Bank of England’s Monitory Policy Committee voted unanimously to reduce the Bank of England base rate to 0.25%, in order to stimulate growth in the economy post Brexit. This is the lowest the bank rate has been in its history.
Although the Governor of the BOE, Mark Carney urged banks to pass the rate cut on, a week or so later and the results have been a mixed bag!
Only borrowers on tracker mortgages will see an immediate benefit, this covers about one in five mortgages.
Plenty of borrowers are on fixed rate mortgages, and they will see no change. However, if their mortgage term is up soon, they should contact us to find them a new one. The chances are they will be able to find a cheaper one, as fixed mortgage rates on new deals have been falling - even pre Brexit and pre base rate cut!
About one in 3 mortgages are on their lender’s Standard Variable Rate (SVR) which is the default rate lenders offer once your fixed /discount /special rate has finished. Those borrowers will be in the hands of the lender. Some mortgage providers may pass on the cut in full, some may decide on a partial cut, others may make no change at all. Remember for every mortgage borrower who gets a rate cut, a saver gets a bit shaved off their interest, so you can see why banks are reluctant to pass it on.
A handful of banks quickly announced that they would pass the cut on in full from September, with others expected to follow suit. A separate scheme announced by the Bank - called the Term Funding Scheme - is designed to ensure that banks pass on the rate cut.
ANYONE ON THEIR LENDERS SVR NEEDS TO TAKE ACTION NOW!! Even if your lender does pass on the rate cut, the chances are you can still do better elsewhere. Some lenders SVR rates are still just shy of 5%, when other lenders will offer rates sub 2%.
For more infomtion or to speak to a mortgage adviser contact us on 01628 507477.
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