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Is Everybody Benefitting from the Interest Rate Cut?

Time to Review Your Mortgage

Is Everybody Benefitting from the Interest Rate Cut?

Following the interest rate cut in the summer, where the Bank of England reduced its base rate to a new historic low of 0.25%, the big question is - has the same reduction been passed on to borrowers? The Council of Mortgage Lenders1 emphasize that whether or not borrowers will see the ripple effect of the rate change depends on the type of mortgage they have. Over 1.5 million of the UK’s 9.3 million owner-occupier borrowers are on tracker rates and should see their monthly payments reduced following the rate cut as lenders alter the tracker rates in-line. More than 3.5 million of borrowers who have a fixed-rate mortgage are likely to see no change to the rate applying to their mortgage until their fixed period ends.

Time to Review Your Mortgage

For the 2.2 million customers paying a standard variable rate, the extent to which their rates are affected will vary from lender to lender. Certain lenders have a floor below which they will not reduce rates, while other lenders use their own version of the base rate which does not necessarily mirror the Bank of England’s rate. Barclays were quick to respond, stating that customers with tracker mortgages and those on standard variable rates will see their rates match the cut.

A spokesperson for Lloyds Banking Group said the base rate is only one of a number of factors taken into account when reviewing interest rates: “All variable rate mortgage and savings products that track the base rate will be reduced by 0.25% from September.”

If you are on a standard variable rate or your promotional period is coming to an end soon then get in touch for a free mortgage rate review. You could reduce your monthly payments, reduce your mortgage term and improve your monthly income. Try us!