It has been announced that the government will be lowering the Bank of England Base Rate in response to the COVID19 outbreak, with the hope of bolstering the economy and leaving homeowners and small business owners with reduced outgoings. With the bank rate due to drop to 0.1% from 1st April this year, it will be the lowest it has ever been in history.
But what does this mean for you? Some mortgage lenders are already announcing that they will be lowering their tracker mortgages by 0.65% in line with the reduction in the base rate. Lloyds Banking Group has announced those on ‘tracker’ mortgage products – that track the Bank of England Bank Rate (also known as the base rate) will benefit from lower monthly mortgage payments from next month, as well as the knowledge that they will be paying overall less interest on their borrowings for the foreseeable future.
If you have a Fixed Rate Mortgage product in place – this is likely to remain unchanged, until your renewal or reversion date (at the end of the fixed period). We are waiting for updates on the lender’s revised fixed rate products which will likely be announced in the next couple of weeks, to take effect from 1st April. First-time buyers, or those currently on their lender’s Standard Variable Rate, may benefit from the new fixed products, as these are set to be the lowest, they have been since the financial crash in 2008.
Whilst the lower base rate isn’t great news for savers, who will see less return on their savings, it will hopefully mean that with the current uncertainty surrounding the economy at present – many will have the additional security of reduced monthly outgoings and the possibility of securing a great deal on their mortgage.
Lenders who have officially announced a rate-reduction in their products are:
- Nationwide who have confirmed their Best Rate Mortgage as 2.25% (from 2.75%), Standard Mortgage Rate to 3.74% (from 4.24%) and Tracker Rate Mortgages will receive a full 0.65% reduction all from 1st April 2020.
- HSBC has confirmed that the Bank of England base rate has been reduced to 0.1%, with effect from Thursday 19th March 2020.
- Virgin Money has advised that customers with a Base Rate Tracker mortgage will see a reduction of 0.1%, with effect from 1st May 2020.
- Santander announced a reduction in their Standard Variable Rate (reversion rate) and Alliance & Leicester Standard Variable Rate by 0.5% from 4.99% to 4.49%, additionally all base-rate linked Tracker mortgages will automatically reduce, including Santander’s Follow-on Rate which will reduce from 4.00% to 3.50% from 1st April 2020.
- Halifax Homeowner Variable Rate currently at 4.24% will decrease by 0.5% to 3.74% from 1st April 2020
- Halifax Standard Variable Rate currently at 4.24% will decrease by 0.5% to 3.74% from 1st April 2020
Our top-tips for knowing if and how you will be affected? Check your lender’s website for live updates. Most lenders are advising customers who will be affected by the reduced base rate will be contacted within a minimum of 5 days before their monthly payment changes.
If you think you might be able to benefit from the reduction of the Bank of England base rate, by securing a new fixed-rate product in the next month – give us at The Mortgage Library a call! We would be more than happy to look into available options. With access to exclusive intermediary rates from an extensive panel of lenders, we are confident we can secure a highly competitive rate for you.