What does this mean for homeowners and those looking to take their first step onto the property ladder?
Well, if you’re one of the 1.5 million UK homeowners with a tracker mortgage, you should be reaping the benefits of lower monthly repayments pretty soon. This is because a tracker mortgage tracks the movements of another rate, and in the UK, this is most commonly the Bank of England Base Rate.
But if like the majority of British homeowners you have a fixed-rate mortgage, a deal which ensures the interest you pay will stay the same regardless of changes made by the Bank of England, you won’t immediately benefit from the decreased Base Rate. However, you may see some return at a later date.
You may have found yourself wondering whether a switch to a tracker deal would help save you some money, but don’t be too hasty. Recent news reports claim some of the UK’s biggest lenders have defied the Bank of England’s Governor, Mark Carney, who said they had no excuse not to pass on the interest rate cut, and have instead increased the price of their tracker mortgages. This means you could end up paying more.
If you aren’t locked into your rate and are free to remortgage, remember that while tracker deals may see immediate short-term benefits, you could be better off in the long-run sticking with a fixed-rate deal. Before you sign on the dotted line, make sure you fully research the deals and read all those Ts & Cs.
The lower Base Rate could spell good news for first-time buyers. Fixed-rate mortgages are at an all-time low and their relatively cheap cost should be taken advantage of to save some extra money. Unfortunately, the same can’t be said for savers, who are likely to suffer as a result of pressure on banks to cut Isa rates following the Base Rate drop.
Those looking to sell shouldn’t worry, asthe Base Rate is expected to lead to a confidence boost in the property sector, resulting in more people taking advantage of the low interest on mortgages and buying houses. As a result, the usual summer slowdown in the property market should strengthen and see properties snapped up quickly (as long as they’re affordably priced). Are you looking to sell your home? Don’t forget to use our free instant online property valuation tool to see how much your property is worth.
Buy-to-let investors will also benefit from the decreased Base Rate as the demand for rental properties, coupled with the low interest, could lead to an increase in people taking up a tenancy agreement, resulting in a profit increase for landlords.
Naturally there has been some hesitation in the property market following the Brexit vote, but those looking to borrow should remember mortgagers are still ready to lend. If you’re unsure how to progress with your property plans, our independent mortgage advice consultants can help you get the keys to your dream home. To speak to our award-winning team, pop into one of our branches or contact us at firstname.lastname@example.org.