In past articles, we’ve written about the Bank of England’s Base Rate and LIBOR.
Here we look at what might happen to mortgages if the Bank of England take the unprecedented step of reducing mortgage rates below zero!
First of all, considering existing fixed rate deals, we are unlikely to see fixed rate mortgage rates fall, even if the Bank of England Base Rate goes negative. The clue is in the title. The rate agreed is fixed for an agreed term. Thereafter, most fixed rate deals revert either to the mortgage lender’s Standard Variable Rate (SVR) or to a rate linked to the Bank of England’s Base Rate or some other datum, plus a percentage.
Unfortunately, for borrowers, many mortgages have a collar below which the loan rate cannot fall, meaning that a negative Bank of England Base Rate would not affect the Borrower’s Rate.
Where there is no collar, loan rates might fall lower still, but it’s unlikely that they will fall much given the already historically low lending rates available today in the market.
In order to better establish if you are currently enjoying the best terms on your home loan, contact Mortgage Required for a free evaluation of the options open to you.
Related articles:
- What’s So Important About the Bank of England’s Base Rate?
- What is the LIBOR Rate and How is it Calculated?
- What is a ‘Fixed Rate Mortgage’?
- What is a Standard Variable Rate (SVR) Mortgage?
Recent posts
Data shows landlords could miss out on green mortgages due to expired energy performance certificates.
Buying a house is a big deal, and where you are planning to buy will make a difference financially. In this short blog, we look at the most affordable and most expensive areas and how much you need to be earning to buy in there.
Pros and Cons of Equity Release
10 days ago
Equity release is a type of mortgage that allows homeowners 55 and over to access money from their property's equity without having to leave their home. This is done by securing a loan against the house which is usually repaid by selling the property when the borrower passes away or has to move into long-term care.
Your House Viewing Checklist
11 days ago
It’s important to ask questions about the property you are interested in before taking that step to make an offer. A little probing can make all the difference between buying your dream house or something that requires a lot of work.
Half of over 60s predicted to benefit from accessing housing wealth through Equity Release
14 days ago
There are millions of homeowners over the age of 60 who are likely to release money from their homes to pay for their lifestyle during retirement giving those who are 'asset rich but cash poor' a way to live out their retirement the way they wish.
Average Age of the First Time Buyer in the UK
21 days ago
The average age of a first-time buyer in the UK is two years older than 10 years ago. This is understandable with managing the cost-of-living and challenges within the economy such as high interest rates making it difficult to get onto the property ladder.
Delayed Start Mortgage from Skipton
23 days ago
Skipton Building Society launches ‘Delayed Start’ mortgage meaning first time buyers won’t be required to make repayments for the first three months.
According to a survey by Skipton, first time buyers who bought their home in the last five years found that in the first three months of living there, they were spending upwards of £30,000.
Gardening Tips for Beginners
28 days ago
If you have recently moved into a property with a garden that requires a little TLC, or you’d like to get on top of your current green space, check out our tips.
More information
Trusted by
