Interest Rates Down To 2%
Yes it’s the first Thursday of the month once more and as usual the Bank of England’s Monetary Policy Committee (MPC) has held its meeting to discuss, amongst other things, the base rate of interest which will be applied to home owner loans and other personal loans.
And for the third month in a row, in what is now becoming a regular occurrence, the Bank announced a further cut in interest rates, reducing it by one per cent.
The bank base rate of interest for the UK now stands at 2 per cent.
The reduction in rate has not come as any great surprise, although many experts were only expecting a cut of 0.5 per cent, following last months 1.5 per cent cut.
Those borrowers who currently have a tracker mortgage will be rubbing their hands together as a typical secured loan of £100,000 will now cost around £83 per month less than it did last month.
The losers in this news are those borrowers who took out a fixed rate home owner loan earlier in the year, as they will now be paying somewhere in the region of £250 extra for their loan since the recent rate cuts, than someone who opted for the tracker route, based on the same £100,000 loan amount.
The other losers in today’s announcement are, of course those individuals with savings in banks and building societies, who are likely to see their interest drop dramatically.
So far the Abbey and Britannia have said that they will pass on the full amount of the rate cut to those borrowers currently paying their standard variable rate on a secured loan and many others will probably follow, in many cases due to Government pressure. In the meantime a large number of lenders have withdrawn all their tracker products until further notice for new loans.
