Will Base Rate Cut Mean Lower Borrowing Costs?
Earlier this month the Prime Minister, Gordon Brown, and the Chancellor of the Exchequer, Alistair Darling, announced that the base interest rate was being cut by 0.5% in a bid to try and boost the economy, ease financial tension in households, and restore consumer confidence. The base rate cut was announced one day ahead of the schedules Monetary Policy Committee meeting, where interest rates are usually set
However, for some consumers the good news did not last long, as some lenders said that they would only be passing on part of the rate cut and others said that they would not pass on any of the rate cut. Therefore, some consumers will not be able to benefit from the base rate cut if they go through a lender that has decided not to pass on the interest rate cut. However, some lenders have already promised to pass on the rate cut, so some consumers will be able to save money
After the 0.5% base rate cut was announced by the government some mortgage lenders did announce that over the next few weeks they would be passing on the full rate cut to borrowers, which means that some borrowers will enjoy the benefits of the base rate cut. However, there were also lenders that decided to pass on only part of the base rate cut, and there were even some that said that they would not be passing on the rate cut at all
When it comes loans whether or not you get a reduced interest rate will depend on a number of factors, such as whether the lender is passing on the rate cut, whether you are a new customer applying for a loan, or whether you already have a loan that is variable rate. Those with fixed rate loans or mortgages will obviously not see any change in their interest rates because they are fixed
As a new borrower or someone that is looking to switch their mortgage or loan you need to make sure that you compare different finance packages from a range of lenders in order to increase your chances of getting the most competitive rate of interest, especially given that the interest rate has fallen. Use the Internet to check what rates are now being offered by different mortgage, loan, and credit card lenders, and you could also save yourself time and money
Mortgage holders that find that their lender does not pass on the rate cut may find that they fare better by switching their mortgage and opting for another provider. Many people decide to remortgage after a rate cut if their own mortgage rate does not fall, but do bear in mind that the new lender may charge upfront fees and costs, and this may counteract the benefits of getting a lower rate of interest
