Many lenders failing to pass on the base rate cut
March 16, 2009
According to a recent report there are many lenders that are refusing to pass on the base interest rate cut to those that are approaching them with a view to remortgaging.
Recent data has shown that lenders are increasingly refusing to pass on base rate cuts to homeowners looking to remortgage, which is proving a disappointment for many homeowners and reducing the amount of choice that they have when it comes to finding a suitable alternatively mortgage.
Recently released figures have shown that since the start of the new Year the average rate of interest charged on a standard variable rate mortgage has only fallen by around 0.31 percent, even though the Bank of England has applied hefty cuts to the base interest rate taking it down to historical lows of just 1 percent.
For those unable to put down a hefty deposit the news is even worse, as they will get the most expensive interest rate mortgages, and in some cases may not be able to get a mortgage at all.
One industry official said that many people would still find it difficult to get an affordable mortgage in the current financial climate, stating: “Anyone coming to the end of an existing mortgage deal in the coming months without substantial equity in their property will find it very hard to find a competitive new deal. Rates are still falling, but at a much slower level than borrowers would have hoped.”
Some lenders are offering mortgages with very low rates of interest, such as 2.29 percent in some cases, but unfortunately these very low rate deals are only available to those that have a larger deposit to put down, such as 25 percent or even 40 percent. This means that some groups, including first time buyers and lower income buyers, are left out in the cold, as most do not have the level of deposit required for the more competitive mortgage deals from lenders.
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