Interest Rates cut by 0.5%

Leon_W

Just on PM question time.

Kavanne

Can't find any news on it?

EDIT: Oh no wait: http://news.bbc.co.uk/1/hi/business/7658958.stm

minimike2

Wow, thats a turn up for the books.

Im happy - that saves me £50 a month on my mortgage and can only be good news for borrowers in general.

EDITION

Hi,

Sounds like good news but will this actually make the lenders drop there rates???

minimike2

Not if SWAPs and LIBOR dont come down too, but its good news for people on base rate trackers.

Kavanne

Just phoned my mortgage provider and my rate will reduce in the next 7 days, taking my payments from £433 to £410. Woo! All hail the tracker mortgage lol

EDITION

SWAP? LIBOR???

Sorry im new to this hehehe

hethmar

If you are in the process of purchasing and have paid your arrangment fee to a mortgage provider, would it be possible to swop products if they lower rates?

minimike2

SWAPs and LIBOR are rates that lenders borrow from each other at - theses ultimately determine the fixed rates, and tracker margins that the banks lend at. In the past they have loosely followed base rate, but have done less so over the past 18 months, so it will all hinge on what these rates do. Either way, it will take a while to filter in.

luckyfool

hethmar wrote: »

If you are in the process of purchasing and have paid your arrangment fee to a mortgage provider, would it be possible to swop products if they lower rates?

Short answer? It depends.

Some lenders will allow it, some will pocket the fee and demand another. The fact that you have paid a fee up front obviously puts you in a weaker position.

You do seem to be fundamentally missing the point of the announcement though.

If the deal you applied for is a tracker, then your deal will still reflect the rate cut. The rate you pay on your mortgage will be 0.50% below what it was when you were quoted.

If its a fixed rate . . . then just because base rate fell doesnt mean new fixed rate mortgage products will automatically come out that are cheaper than what you just signed up for. If anything in the last week or two both tracker margins and fixed rates have been becoming more expensive in general. It remains to be seen whether this will change that.

The only reason to be switching right this minute is if you signed up for a fixed rate . . . and having seen this your reasons have flown out the window and now want a tracker.

jtg450

I agreed to a 5 year 5.84% fixed rate yesterday. It may have dropped 0.5% but I dont see the banks passing this on very quickly.

At the end of the day the banks are not there to help you just to make sure their own shareholders make a decent profit.