Today, the 11th March, the Bank of England announced a reduction in the base rate of 0.5%. This is part of a number of measures taken by the BoE to mitigate the economic harm caused by the Coronavirus (also known as Covid-19).
We understand people may have some questions regarding interest rates and what this means for them and their mortgage.
See below some frequently asked questions and answers to help address any queries or concerns people may have.
1) Will the recent rate reduction mean lower interest rates?
For those on tracker mortgages the rate reduction will automatically be passed on. Variable and Discount mortgages, it will be up to the lender whether they pass the reduction on. Existing fixed rates mortgages their will be no effect.
2) Will mortgage rates offered reduce?
At this time no lender has announced any new products or indicated that the recent Bank of England reduction will lead to lower mortgage rates being offered.
3) Why was the rate reduced?
The rate was reduced to ease the pressure on the economy caused by the Coronavirus and to attempt to stop the recent stock market falls. The main reason the rates have been reduced is to ease the pressure on people being off sick or self isolating as it should lead to them having more money in their pocket.
5) Will this lead to prices falling?
The rate reduction has had no effect on prices and in the short term is unlikely to. First Mortgage (NE) as a company cannot predict whether prices will rise or fall. The rate reduction should ease market fears of prices changing.
6) Is it still a good time to buy?
Market interest rates have never been lower and the cost of borrowing has never been cheaper.