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.

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