Bank Rate Cuts That Will Make Your Mortgage Plunge

An overflowing number of homeowners have less mortgage repayments to worry about. The Bank of England cut its official interest rates that resulted to reduced monthly mortgage payments. Tracker mortgages decreased as the interest rates plunged to 0.25pc from 0.5pc. Borrowers instantly see a cut in their mortgage costs. According to official data, borrowers with Bank Rate trackers are around 1.5 million while 3.5 million others have different variable-rate mortgages.

Mortgage Cost Fall is not for Everyone

Although bank rate cut means lesser monthly payment for borrowers with tracker mortgages, it does not hold true to everybody. Director of mortgage broker Coreco, Andrew Montlake, states that the reduction of bank rate does not automatically mean lower mortgage cost and that it does not necessarily apply to every borrower.

It all depends on the lender. Some lenders have floor below or collar that gives them the imperative to maintain their rates. There are others that impose their own base rate version. Furthermore, these base rates do not reflect the rates of the Bank of England. It is essential to check your mortgage’s small print in order to know if you are qualified for the reduced monthly repayment or not.

First Time Buyers Pay Careful Attention

Cut in bank rates basically leads to more affordable mortgages. However, it is not a guarantee of convenience especially for first-time buyers. It is only beneficial for those that already have an existing home and mortgage. The rate cut reduces all existing mortgages however it does little for buyers who are taking their first step towards home purchase. The UK real estate market experiences shortage of properties. The expensive prices also make home ownership a luxury that not all people could afford.

Check your Provider for Bank Rate Cuts

The first bank that confirms bank rate cut to standard variable rate is Santander which will take effect on the 1st of September 2016. Other service providers that followed suit include Virgin Money and Coventry Building Society. Lenders that made announcements for tracker mortgage rates reduction were included in the list:

  • Barclay

Implementation of bank rate cut to 0.25pc started in September 1st 2016 for all existing customers. New mortgage holders experience lower monthly payment which started August 5th 2016. The rate cuts are applicable for both variable rates and tracker rates mortgages.

 

 

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Bradford & Bingley/Mortgage Express

Most customers get reduced monthly mortgage repayment for variable rates starting September 1st 2016. The same 0.25pc rate cut is expected for tracker mortgages but no affirmative date has been announced just yet.

  • Coventry BS

All existing mortgage holders will benefit from the bank rate cut of 0.25pc from the 1st of September 2016. This cut applies to both mortgage tracker rates and variable rates.

Clydesdale, First Direct, and Halifax however are still reviewing the rate and did not release any announcements for their customers.