What the Interest Rate Cuts Mean for you on a Fixed Rate
I’m on a fixed-rate deal
Unfortunately, if you’ve got a fixed-rate deal at the moment, then you won’t see any benefits from this week’s rate cut. However, the chances are that you’ll have to think about remortgaging within the next couple of years, and, with a bit of luck, mortgage rates should be even lower than they are now by the time you start to shop around.
Even if your current deal is about to end, it’s probably worth hanging on a few weeks to see what deals emerge now that the Bank of England rate has come down. Significantly, Libor – the rate at which banks lend to each other, which is much more important when it comes to pricing mortgages – also fell significantly yesterday, increasing the likelihood that the banks will bring out some much cheaper deals over the coming days.
Melanie Bien, director of independent mortgage broker Savills Private Finance, says: “The significant fall in three-month Libor is more important in terms of new borrowing rates than the drop in base rate. Lenders have pulled their trackers and have been waiting to see what happens with inter-bank funding – they will now be under huge pressure to pass most of it on.”
It’s now all but impossible to get a mortgage if you have less than 5 per cent equity in your property, so keep an eye on property prices in your area, and if you think you’re in danger of hitting negative equity, try and make some overpayments to your mortgage to keep yourself in the black.