Mortgage rates: Bank of England base rate will hold but what does it mean for borrowers? | Personal Finance | Finance
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Getting on the property ladder can seem like a huge challenge, with finding the best deal being no mean feat. Meanwhile, those who are amid a mortgage term may look to switch to better deals while repaying the loan in their bid to become mortgage free.
Today, the Bank of England has announced that the Monetary Policy Committee has voted to maintain the Bank Rate at 0.75 percent, by a majority of 7-2.
The base rate is the Bank of England’s official borrowing rate, and it influences what borrowers pay and savers earn.
The 0.7 percent rise came after it increased from 0.5 percent in August 2018.
So, what does this latest decision mean for those who have, or are seeking, a mortgage?
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Following today’s Bank of England interest rate decision, Kevin Roberts, Director, Legal & General Mortgage Club said: “This morning’s decision to hold the interest rate is unlikely to have an impact on consumers’ finances, at least in the immediate term. However, for borrowers, the continued low-interest climate and ever-growing number of products available have well and truly put consumers in the driving seat when it comes to securing a mortgage.
“Now is an excellent time to for anyone looking to secure a new mortgage, or considering a switch to a different product, to seek independent mortgage advice.
“An adviser can help borrowers to tackle some of the big financial decisions they need to make around a mortgage, such as taking out a variable rate or locking in for a fixed term.”
Daniel Hegarty, CEO and founder of Habito, the pioneering mortgage broker and lender, commented: “We hope today’s ‘keep calm and carry on’ approach to hold interest rates will complement the bounce seen in consumer confidence following the election, and get the UK moving in 2020.
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“Over the last few years, we’ve seen a surge in homeowners choosing fixed-rate deals for their mortgage.
“So many homeowners will be protected from any uncertainty around their monthly mortgage payment, should the Bank of England change rates later down the line.”
Paresh Raja, CEO at Market Financial Solutions, said: “The Bank of England treads carefully when deciding on the interest rate, so the fact they’ve decided to leave it at 0.75 percent is an important decision.
“Investor confidence is returning, and we are likely to see the markets post a modest performance in the aftermath of this announcement.
“Low interest rates work to the advantage of borrowers; I expect many lenders to review their rates and consider further cuts to ensure they have an edge of their competitors.
“When it comes to mortgages, however, this doesn’t necessarily mean getting a loan from a bank will become any easier.
“To minimise their risk exposure, banks are tightening their lending criteria, making it more difficult for investors and businesses to access finance they need to buy a property.
“Overall, I’ll be interested to see how this rate cut affects the property market, and whether the Bank will consider further rate hikes over the coming months depending on how Brexit plays out.”
Mark Gordon, Director of Money, comparethemarket.com, said: “With interest rates already low by historic standards, mortgage holders and those aspiring to get on the ladder need not be disappointed by today’s announcement that the current rate will hold.
“It remains a good time to shop around, with plenty of competitive fixed rate deals available for those coming to the end of a fixed mortgage term.
“Those currently on a standard variable deal are likely to make considerable savings by locking into a fixed rate deal.”
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