Could the base rate drop as low as 4%?
July 21, 2008
Over the past sixteen months or so homeowners on variable rate mortgages have really suffered financially, having seen their relatively low rates of interest rocket to sky high levels following a series of five interest rate rises from the Bank of England between August 2006 and July 2007. This has meant that their mortgage interest rate has also rocketed, and as a result of this their monthly repayments have gone through the roof in some cases, causing immense financial difficulties for some homeowners, and causing the level of repossessions to rise.
It is little wonder then that many homeowners on variable rate mortgage loans breathed a sigh of relief when the Bank of England announced earlier this month that the base rate was to be cut by a quarter point, taking it down to 5.5% - a long way off from the 4.5% it stood at in August 2006 before the first of a series of five rises but marginally better than the 5.75% it has stood at since July 2007.
Additional good news is that most lenders have passed on the full interest rate cut to borrowers, although many had been concerned that some lenders my fail to do this. According to some analysts and economists there may be more good news on the for mortgage payers with variable rate loans, as there are two or three additional interest rate cuts predicted for next year.
In fact, some are predicting that by the end of next year the base rate could even have fallen as low as 4%. One economist stated: ‘The Bank of England has pulled the ripcord to much lower rates. We could well be seeing them coming down to 4% in this cycle.’
Recent additions:
- Mortgage lending remains strained state officials
- Halifax increases rates for new borrowers
- Difficult decision for those wishing to remortgage
- Another house price tumble according to figures
- Halifax makes more upwards changes to rates
- Interest rates could plummet next year according to officials Over the past couple of years interest rates have soared to 5.75%, leaving many homeowners struggling to keep on top of their mortgage repayments and resulting in an increase in repossessions. Homeowners were therefore relieved
- Drop in insolvency numbers A recent report has shown that the number of people that are being declared insolvent in the UK has fallen across England and Wales. The third quarter of the year saw a drop of 3%
- Property sector faces toughest times in thirty years Officials from the Royal Institute of Chartered Surveyors have recently stated that the UK's property sector is facing its toughest challenges in thirty years, as house prices plummet and house sales figures go through the
- Consumers looking at ways to reduce mortgage repayments A number of mortgage brokers have said that many consumers have been looking at ways to reduce their mortgage repayments by remortgaging to different deals that could work out cheaper on a monthly basis. Many
- Halifax mortgage entry fee comes under fire Leading high street lender Halifax has recently come under fire after announcing that it has introduced a mortgage entry fee on its mortgage products amounting to around £245. New borrowers taking out a mortgage will
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