Date Published 11 November 2008
Borrowers who are now `Quids in`
Friday 7th November 2008
So, what does the 1.5% cut in base rate mean for those with mortgages?
Undoubtedly, the real winners are those with tracker mortgages, which follow the movements of the Bank of England’s base rate.
This immediately translated into large monthly savings for borrowers who have benefited from an overall cut in interest rates from 5% to 3% in the last few months. Recent borrowers with tracker mortgages in particular are reaping the rewards.
However, the bad news is that on Wednesday, the day before the 1.5% interest rate cut – taking us back to 3% – Woolwich, Lloyds TSB and Northern Rock all removed their tracker mortgages, while Abbey pre-empted what it thought would be a half-point cut in interest rates by increasing its margin on tracker mortgages by 0.5% on Tuesday.
Furthermore, according to the Financial Times, brokers say they expect all lenders to raise tracker mortgage rates to avoid being inundated with applications from homeowners looking to benefit from further interest rate falls.
However, for those who got their tracker mortgages in good time, the savings are extraordinary and the luckiest (though no doubt they’d say the savviest) are the buy-to-let brigade who are now benefiting from good rental demand as well as lower borrowing costs. They are literally `Quids in`.
We currently offer an Independent Mortgage Advice Service to all our prospective purchasers and would like to extend this service to our existing customers as well. If you are interested in a ‘No Obligation’ review of your mortgage or financial arrangements with our resident Mortgage Adviser please contact us on 020 8306 2020.