Bank of England rate dropped to lowest ever — What does this mean for you?
Today the Bank of England unanimously voted to cut its base rate from 0.5% to 0.25%, naming Brexit as the primary reason.
It marks the first time that rates have been cut since the credit crisis of 2009. This cut forms part of a hat-trick of strategies designed to encourage spending, increase lending, and instil more stability in the UK economy.
Whether an aspiring or existing homeowner, we’ll break down the impact today’s news could have on your mortgage payments.
Who will the rate cut affect?
Of the 8 million mortgage holders across the UK, around 1.5 million will see their rates reduced immediately. A further 2.2 million could see some changes, while the remainder won’t initially see any change at all.
Those on Tracker Rates will benefit almost immediately. Their monthly payments will likely fall unless a minimum rate was previously agreed by their lender.
Fixed Rate mortgage holders won’t see any immediate change to their current deal. Depending how close to the end of the initial term they are, it may present an opportunity to shop around for a better deal.
Those on Standard Variable Rates could also see their payments reduced in the coming weeks or months. However unless it’s linked to the Bank of England rate, their lender’s under no obligation to lower it — despite Governor Mark Carney being quoted as saying the banks have “no excuse” not to pass this rate cut on.
What does this mean for me?
I’m looking for a mortgage
Unfortunately this news won’t affect the millions who are still struggling to save up for a deposit, especially if they’re relying on the Bank of Mum and Dad whose savings will increase more slowly after the rate cut.
If you have been able to get your deposit together, you’re quids in. Rates have never been lower. See what you could borrow in just a few minutes here.
I’m on a Fixed Rate
If you recently secured a Fixed Rate mortgage there’s no reason to feel like you’ve lost out. Even before today’s cut, mortgage rates were at historically low levels. Lenders have been anticipating this cut for months, and many — including HSBC, Tesco, TSB, Santander, Barclays, and Coventry — had already reduced their rates accordingly.
It may be worth switching to a lower fixed rate deal if you’re coming to the end of your initial period. But don’t be caught out by any early repayment charges that some lenders include in their mortgage products. Find out if it makes sense to switch with our free mortgage checker.
I’m on a Tracker Rate
If you’re lucky enough to be on a Tracker Rate you can sit back and enjoy spending less on your mortgage each month. Depending on the size of your loan you could see the following savings:
I’m on a Standard Variable Rate
If you’re one of the 2 million people on a Standard Variable Rate, you shouldn’t be. While you could see a slight drop in your monthly payments in the coming weeks or months, you’ll be able to save much more by switching to a fixed rate mortgage. See how much you could save with our free mortgage checker.
How is Trussle responding?
Because of the unique way that we use technology to power our service, we’re able to assess the market even after we’ve submitted your application to the lender. If the lender lowers their rates we’ll pick up on it and notify you immediately.
If you’ve recently secured a mortgage with us, we’ll continue to monitor your mortgage as usual, and if we find a more suitable deal we’ll help you switch so you never pay more than you should.
Our friendly team of advisers remain on hand to answer any questions you might have. You can contact them at any time via the online chat on our website, by email, or you can call them on 020 3770 1863.
Trussle is the new hassle-free way to get a mortgage. We help first-time buyers and existing homeowners save time and money securing a great-value mortgage online. We then continue to monitor your mortgage and help you switch to a better deal later on, so you’re never paying more than you should.
Visit trussle.com to see what you could save on your mortgage.