The Bank of England sets the base rate and it’s important to homeowners because it acts as a benchmark for the cost of borrowing money. As a general rule, if interest rates fall, mortgage rates will fall too.
Here’s how it could affect you:
Taking out a mortgage: If you’re shopping around for a new mortgage or want to remortgage, the mortgage rates available should improve if interest rates fall.
Tracker mortgages: If you’re in the middle of a tracker mortgage deal and interest rates are cut, your mortgage payments will fall as the rate you pay in your mortgage rises and falls in line with the base rate.
Discounted variable rate: While if you’re on a discounted variable rate, you’ll pay a rate that’s lower than the lender’s Standard Variable Rate. If your lender decides to pass on the cut in interest rates, your mortgage payments will fall. But it won’t necessarily pass on all or any of the cut.
Standard variable rate: If you’re on your lender’s standard variable rate, if your lender decides to reduce its SVR if interest rates fall, the amount you’ll pay will fall. But again, the lender may not pass on all or any of an interest rate cut. And if you are on your lender’s standard variable rate, you should know these rates can be extremely expensive, so check your deal now to see if you can save by remortgaging.
Article From Home Owners Alliance Online
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