These are unprecedented times, and it seems as though there is new news and information being issued on a daily basis. The Bank of England initially announced they would reduce the base rate to 0.25%, but this was followed with an additional cut, reducing the base rate to 0.1%.
These steps are just some of the measures being taken to support the economy against the current circumstances caused by COVID-19.
Any property owner who has a tracker mortgage should soon this reduction in rate be passed on their mortgage payments. Also, any homeowner with a standard variable rate mortgage should also benefit, as many providers will incorporate this change into their own base rate. It remains to be seen the full impact of interest rates cuts, but it is a major measure.
Businesses and consumers need more support than interest rates being cut
Sam Harhat, is the Head of Financial Services at Andrews Property Group, and he said; “The message the Bank of England wants to give consumers and businesses through Thursday’s historic action is simple, we’ve got your back. Through countless monetary and fiscal measures, the Bank of England and government are throwing the kitchen sink at the economy in an effort to bridge it across the peak phase of the pandemic.”
It is not yet clear how this decision will impact on businesses and consumers, but it is clearly a bold move during unprecedented times.
While this move will be welcomed by many mortgage holders, there will be some people who don’t benefit. According to figures provided by UK Finance, 69% of people who had an outstanding mortgage as of December 2019 held a fixed-rate mortgage. These property owners will not benefit from the reduction in interest rates.
UK Finance states 11% of homeowners hold a tracker mortgage, so these people and homeowners with a standard variable rate mortgage will benefit.
The mortgage holiday may be of benefit to some homeowners
Anyone who holds a fixed rate mortgage but who is looking for some positive news may take comfort from the introduction of the three-month mortgage payment holiday which is available if required.
Anyone looking to remortgage or seek advice from lenders would be advised to act as quickly as possible. Andrew Montlake is the Managing Director of mortgage broker Coreco, and he tips things to change quickly in the industry. He said; “Lenders have their own issues to deal with as many of their staff are off or working from home so this is unlikely to translate into cheaper rates across the board. We are already seeing some lenders, especially more specialist mortgage providers, increase their rates to protect their positions. For anyone looking at remortgaging within the next six months, now is categorically the time to get on with it.”
Anyone with mortgage questions should be proactive in seeking guidance or assistance. This is a period of significant uncertainty, but help is always available. Also, it is unlikely assistance will be offered unless it is requested, so it is important for mortgage owners to stay on top of their finances and their situation.