Fixed Rate interest rates dropping with base rate....

homeless9

Hi,

My situation: 

A week ago I got approved for a 5 year fixed rate mortgage with Santander. Since then the Bank of England have dropped their base rate and it seems they will apply another drop soon after the USA dropped theirs again.....

I have not taken on the mortgage yet, I have not exchanged contracts, I am currently in the process of making sure all the searches are done by the solicitor and that all the documents provided by the developer satisfy myself and my solicitor.

I am buying a new build. Exchange of contracts deadline is 6th April. Completion deadline is 30th April.

My Questions:

At what point do I commit to the mortgage offer? is it at exchange of contracts?

If the answer is 'yes' to the above......and Santander apply the base rate interest drop to their fixed rate mortgages before I exchange contracts will they just automatically apply it to the offer I have already been sent? or would I need to reapply and get Santander to go through all my documents again and then offer the new rate?

amnblog

Base rate does not affect fixed rates, they are not linked.

homeless9

amnblog said:

Base rate does not affect fixed rates, they are not linked.

I understand that the base rate drop does not affect fixed rate mortgages that are in place.....

But surely base rate drops will be applied to future Fixed Rate mortgages that are being offered - right?

So in my situation - I do not have a mortgage yet - I only have a fixed rate mortgage offer......

Would I need to reapply once they change their offers for fixed rate mortgage products with the base rate drop applied?.......

I assume so - as you say they won't apply the base rate drop to an existing mortgage and therefore I assume that also applies to fixed rate mortgage offers.

So say they offered a much cheaper fixed rate mortgage offer on their website tomorrow.... I'd just have to reapply. They won't add that drop to my recently approved mortgage offer.

amnblog

If a lower fixed rates becomes available, some Lenders will re-offer on request on the new rate. Some Lenders require cancellation and re-application.
Do not rely on seeing a better offer as fixed rates are already very low and the base rate is not a direct driver for fixed rates.

SeanG79

It usually takes months for the rate cut to filter down and as mentioned previously this may have little to no impact on fixed rates, which are already very low.

homeless9

amnblog said:

If a lower fixed rates becomes available, some Lenders will re-offer on request on the new rate. Some Lenders require cancellation and re-application.
Do not rely on seeing a better offer as fixed rates are already very low and the base rate is not a direct driver for fixed rates.

Understood.

Thanks for your help.