For over seven years now the Bank of England’s base rate has been at a steady 0.5% but this month we saw them get cut to 0.25%. A move which probably didn’t come as a surprise to most, as it’s been clear that a cut was on the cards since the Brexit vote, to offset the shock to the economy. How you feel about it will depend entirely on whether you’re currently a savvy saver or you’re on the borrowing side of the fence. So, how will the move affect you?
We’ve decided to take a look at what this will mean for property owners and those looking to buy.
I’m a mortgage holder, will this benefit me?
Unfortunately, if you chose a fix rate mortgage, your monthly repayments will stay the same regardless of the cut. However, if you are lucky enough to be on a tracker deal then you are likely to start seeing a reduction in mortgage payments from September.
If you’re on a lender’s Standard Variable Rate, then you will have to wait and see whether it will be reduced and if so how much by as this will be down to your bank or building society.
It won’t however be a huge saving – so don’t go popping the celebration champagne just yet.
Will this affect my ability to save for a house?
Unfortunately, if you are one of many who are currently saving up a deposit for your first home the lower interest will mean lower savings rates, making it harder to save.
However now would be the perfect time to take advantage of one of the government savings schemes such as the Lifetime ISA or Help to Buy ISA which include government bonuses and tax-free interest.
I’m a first time buyer, how can I benefit from this?
Cheap mortgages are great for first-time buyers and if you’re looking for a fixed rate mortgage now, it’s a great time to get a deal as they are probably the cheapest they are going to get. With some banks such as HSBC offering a two-year fix at 0.99% in return for a 35% deposit and a £1,499 fee.
If you’re disappointed by the interest rate cuts, remember that you can always make savings elsewhere. Including using MoveIT to compare quotes for all of your home-moving services, such as conveyancing and mortgages. Speak to your agent today to find out more about how MoveIT can help you save both time and money.
