What does Bank of England base rate cut mean for you?
On 11th March, the Bank of England (BoE) slashed interest rates from 0.75% to 0.25% to help reduce the impact of COVID-19 on the economy and on the 19th March, it cut rates still further to a record low of 0.1%.
But what does this mean for you and your finances?
Reduced mortgage payments
If you are one of the 11% of borrowers on a 'tracker rate' mortgage, you will see a reduction on your mortgage repayments. This is because tracker mortgages follows or 'tracks', the BoE base rate. Similarily, those on variable rate mortgages (comprising 14% of all UK mortgages) should also benefit from the base rate cut.
However, you'll lose out if you're on a fixed rate deal, so consider remortgaging while deals are still available.
Bad news for savers
Savers are set to recieve even less of a return on their investment. Still, some accounts will have a better rate than others, so it's worth shopping around.
A blow for first-time buyers
With lenders pulling 'riskier' products off the market, first-time buyers could struggle to secure a deal. Those still saving for a deposit could also face setbacks if the values of their savings drops.
You may have to pay an early repayment charge to your existing lender if you remortgage
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Your home may be repossessed if you do not keep up repayments on your mortgage
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