Breaking news about the Bank of England cutting its interest rate to 3% has prompted me to blog again. That’s the lowest rate for 53 years. Reactions are mixed.
Will mortgage lenders pass on the low rate to borrowers? Is it a panic move? The risk of lending has been so high of late that lenders are demanding higher rates for offering credit.
If you’re on a tracker mortgage a rate cut of around 1.5% should follow through (unless there's a minimum rate clause). Fixed rate mortgages, as the name suggests won't change. Discount/Standard Variable Rate mortgages may see a 0.5 or 1% cut, but it's at the lender's discretion.
Now's the time to review the rate you’re getting on savings. Because if borrowing is cheaper then savings won’t attract high interest rates. If you can get a fixed rate that's good, go for it.But only if you can afford to tie up your money for a while.