Interest rate cut - Will it be passed on?

Glover1862

My fix rate is abut to come to an end, I'm only at 28% LTV so should get decent rate, best 5 year is HSBC 1.99% with £999 PF. I've not seen this rate change in many months, in fact I've seen very little movement in the lowest LTV (65% or above) rates at all. I've a feeling this is the bottom and even if a rate cut was announced this week I can't see it getting much lower, a lot of the press seem to think that actual rates could rise as banks need to maintain their margins.


Does anyone think that there is anything more to pass on with the lowest LTV IF there is a cut?

Thrugelmir

Banks lending rates are influenced by what their funding costs them. Banks do not borrow at BOE base. Totally the reverse. That's what the BOE pays them to deposit money overnight.

Banks have to make a margin to cover overheads, regulatory fees, bad debts, tax, dividends etc. So rates can only fall so low.

Glover1862

I've been offered 5 years at 2.14% £999.00 PF from Co-Op as a retention, don't think I'll do much better than that, its only 0.15% more than the market leading hsbc and won't be a pain.

I've got 4 months to go but could lock in now with the CO-OP, alternatively wait and see what happens, I think lower LTV has neared the bottom, any movement seems to be with be with higher LTV from what i can see..anyone disagree??

SavingSteve

Definitely set on a 5 year? As a two year is half the interest rate you've mentioned at HSBC. Obviously you'd be paying another product fee in 2 years, so depends on the relative size of the fee compared to mortgage.

Glover1862

SavingSteve wrote: »

Definitely set on a 5 year? As a two year is half the interest rate you've mentioned at HSBC. Obviously you'd be paying another product fee in 2 years, so depends on the relative size of the fee compared to mortgage.

Yeh, too much hassle changing every two years, but mainly put off by the £1499 fee that comes with the 0.99% hsbc deal. Mines not a massive mortgage, just under £130k and 17 years term remaining, allowing for the products fees I'm not much worse off with the 5 year deal. Coop are offering 1.24% on a two year so still a good deal, they also do a 5 yr 2.39% no fee which works out about the same as the 2.14% with £999 PF, just not sure to lock in now or leave it a while.

SavingSteve

I'm in a similar boat in terms of remortgage due in a few months. If it's any help I'm planning on holding out to see what the impact of a rate reduction will be. Thinking is that it may increase the competition in the market thus possibly drive rates down. And if they don't I'm gambling on the rates not going up.