Bank of England interest rate cut to 0.25 per cent
04 August 2016
Statement from Lee Travis, head of professional development, Society of Mortgage Professionals
“The Bank of England’s decision to cut the benchmark interest rate to 0.25 per cent will provide further stimulus to the UK mortgage sector and represents good news for borrowers – especially for those entering the market at a time when the base rate reaches a new record low.
“Existing mortgage holders on tracker rates will benefit from the reduction in their monthly repayments and for many it will be the first change to the official base rate since the commencement of their mortgage.
“It must be noted that these are unprecedented times in the mortgage sector and lenders have responded to the heightened level of competition by offering a raft of new products. These include a range of 10-year fixed-rate mortgages, which are being offered at record low rates.
“Of course, longer term fixed-rate deals should always be approached with caution as they can reduce the flexibility offered to the borrower.
“While a highly competitive mortgage sector is good for consumers, it is important for borrowers to do their homework before committing to a new deal, and seek advice where they can. They should ensure that all terms and conditions are completely understood and fit into their broader personal finance plans.
“And although the interest rate cut is good news for borrowers, lenders have yet to fully respond to the Brexit referendum and other events of recent months. If they adjust their risk appetite in response to concerns over falling house prices, lending practices may be reigned-in and they may find it more difficult to obtain a loan.
”Advisers now have a very good reason to contact clients to review their mortgage and general financial situation, with a view to possibly providing better deals for them.”
