Hope for first time buyers as interest rate is cut
Around 5 million homeowners may benefit from lower monthly mortgage payments following the Bank of England’s cut to the interest rate on 4th August 2016.
For the first time since the recession the base rate for interest has been cut, falling from 0.5% to 0.25%. Borrowers with tracker mortgages will likely see a change in their monthly payments straight away, whilst those with a variable mortgage will be hoping that Banks pass on the interest rate cut to their customers. A low base rate allows Banks to borrow money more cheaply, meaning they can pass these savings on. A number of lenders including Virgin Money, Coventry Building Society, Santander, Barclays, Lloyds and Nationwide have already confirmed that their customers with a variable mortgage will benefit from a reduction from 1st September. Mark Carney, the Governor of the Bank of England, said yesterday “the banks have no excuse – with today’s announcement – not to pass on the cut in bank rate.”
This spells positive news for first time buyers as mortgages are likely to become even more affordable. Prior to the cuts yesterday, rates were already at a historic low and further cuts will no doubt help those hoping to get on to the property ladder for the first time. Record low mortgage deals may provide some well needed encouragement for young people following the uncertainty surrounding Brexit.
If you are a first time buyer thinking of buying your first home, please contact Jennifer Chrzanowski or the residential conveyancing team on 01202 057785 for advice and information.