The Bank May Have Cut the Interest Rate but Savings May Escape You

The Bank May Have Cut the Interest Rate but Savings May Escape You

The Bank of England’s Monetary Policy Committee (MPC) last week met to further examine the current UK economy and made the decision to again cut the standard base rate. This time the cut took the rate to the lowest ever in the Bank’s history at 0.1%. This will make it cheaper to borrow and for those on variable rates it will make their repayments less costly.

However, homeowners with variable rates or on their lender’s standard variable rate (SVR) may not experience the big drop in their mortgage rate. Lenders are businesses and they must make money. Some are experiencing their own financial issues due to the coronavirus epidemic as they choose to financially support their staff that are home or ill and as they navigate daily services that aren’t normal. The lenders will only pass along savings, if any, to their mortgage holders as they can.

The biggest winners with the lower rates are likely to be those remortgaging or home buyers getting a new mortgage. They will face the most attractive rates versus the homeowners with variable rates and lender’s SVRs. Lenders are seeking new borrowers. They need to get the attention of borrowers and by offering attractive deals they will get new business. Therefore, those seeking a remortgage or mortgage will likely have access to the very best deals.

Remortgaging homeowners have incentive to get a deal other than savings. Some will seek an equity cash release deal to put cash into their hands. No doubt it could be helpful for most due to the covid19 pandemic. Homeowners that do choose an equity cash release remortgage can spend the cash they receive in any way they want, whether that is for daily support, an emergency fund, to make purchases, or consolidate debt. It’s their choice since it is their built equity now converted to cash.

Luckily, shopping for a remortgage is easy to do online. A homeowner can shop around the deals offered by lenders and easily seek the many offers available through remortgage broker sites. Most offer quick quotes from lenders and most brokers offer comparisons of lender deals. It is a smart start for most homeowners to shop online and discover what savings could be found with the lower interest rate remortgages now available.

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