How long before the banks pass on interest cuts?

LittleMissRios

Hi, I'm a newbie looking for advice on remortgaging. I basically don't know how long to wait before taking the plunge. With interest rates coming down (at last!!), when are the banks going to start seriously cutting their rates? I know it isn't a given by any means, but I'm thinking there could be a gr8 time to remortgage over the next couple of years if they slowly follow the trend? Or am I just dreaming and should look for a better deal right away?? The terms of my current fixed deal are about to end.

lisyloo

You should go for it staright away (it could take up to 3 months to get the survey and legal work done).
Check out your existing lender as well.

Base rate will go down over the next 12 - 18 months but trackers are likely to get more expensive (in relative terms) and fixes may not change much, so during this banking crisis I think there is no valid reason to wait.

mr_jetlag

Don't wait. While some mortgage products still track the BoE base rate, many banks choose not to pass on rate cuts because their mortgage funding is dependent on the money markets, whose rates have not come down as fast as the base rate.

If your fixed deal is ending I would suggest you speak to the many banks out there who offer to beat your existing deal (I know Natwest for used to do this). I did this last year a month before our two year fix was ending. Even one payment at SVR for me would have cost £158 more than the remortgage I eventually went onto.

The banks are slightly more lenient to remortgagees than to new buyers. Play them against each other and remind them that if you choose to fix now it may be in their interests to offer you a good deal (as fixing "locks in" their profit from you). Try to get independent advice and include all the fees in your overall costs.

monkeymaster

LittleMissRios wrote: »

Hi, I'm a newbie looking for advice on remortgaging. I basically don't know how long to wait before taking the plunge. With interest rates coming down (at last!!), when are the banks going to start seriously cutting their rates? I know it isn't a given by any means, but I'm thinking there could be a gr8 time to remortgage over the next couple of years if they slowly follow the trend? Or am I just dreaming and should look for a better deal right away?? The terms of my current fixed deal are about to end.

Just because the BoE base rate comes down doesn't mean mortgage rates will, in fact they probably won't. If you take America as an example, the FED base rate there is now only 1% but I believe average mortgage rates are still above 6%.

koexelek

monkeymaster wrote: »

Just because the BoE base rate comes down doesn't mean mortgage rates will, in fact they probably won't. If you take America as an example, the FED base rate there is now only 1% but I believe average mortgage rates are still above 6%.

True, it's the LIBOR rate that is currently dictating mortgage rates, not the Bank of England Base Rate

confused31_2

koexelek wrote: »

True, it's the LIBOR rate that is currently dictating mortgage rates, not the Bank of England Base Rate

yeah and the LIBOR rate is getting closer to the boe base rate, i think mortgages will come down.

It depend on how much your going to remortgage for i was going to borrow a further 30,000 through the nationwide and there wasnt much difference in their fixed deal to the svr, i think it was 12 pound a month but the fee was 599 for the fixed over 2 years.

Just go on the SVR and jump on to a decent deal when it comes along, saying that, the interest rate on the SVR at nationwide is 6.19 some other banks SVR might be a lot more.

confused

Conrane

Having supported or even saved the banks, the Government was expecting that rate cuts would be passed on by the banks to ease borrowing and stimulate the economy. There is no guarantee that the banks will pass on the cuts and most have not, but I think they will come under pressure to start doing so.

bright_15

confused31,

Very confusing at the moment, it wasn't too long ago that Nationwide were doing fee free morgrages with a good loyalty deal....

Now they are upping the rates just before a boe rates drop... great one Nationwide

Alot of lenders have upped the tracker rate so much, i'm not sure of the value any more... 1.98 % above the boe rate - 12 month's ago no one would have opted for such a deal....