Bank of England rate drop?

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    Bank of England rate drop?

    Is the BOE going to drop interest rates from 0.25 to 0.1 ? And are all UK banks mandated / legislated to pass onto the drop / savings to mortgage customers?

    Is there any difference in the way they are treating home owner vs rental mortgages?

    #2
    Yes.
    No.
    Yes. They're fundamentally different types of loan.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

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      #3
      Much depends on the trigger mechanism of the loan , if it is linked to Bank Base or 3 month Libor rates then yes borrowers will get the benefit , the latter mechanism being applied on the next quarter date. If however it is the lenders Standard Variable Rate there is no obligation to reduce by the same level of rate reduction but being ever keen to retain borrowers goodwill the SVR will e adjusted to some extent. Fixed Rates obviously no until the incentive period expires.

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        #4
        Thanks. I think I'm on a tracker or SVR now. Definitely not fixed.

        Is it possible to get a Tracker mortgage over the life of the mortgage eg. 25-30 years, of do all banks only offer this to lure new customers for 2-5 years initially, then switch to a less favourable SVR

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          #5
          Originally posted by jpkeates View Post
          Yes.
          It's happened. Lowest in 300 years.........

          Any chance it will go negative?

          Comment


            #6
            There is only one product which carries throughout the term of the mortgage and assumes that you only have one BtL property in your armoury , that offers a variable rate of 2.85% with No Early Redemption Penalty: all of the other lenders offer Tracker, Discounted products for either 2/3 or 5 years the latter two being Discounted rates.

            No-One can predict what will happen if rates go into negative territory , given that this would have a serious impact on many lenders to obtain institutional funding, there is every likelihood of these lenders having to withdraw from lending until normality returns , already one lender has today announced to the intermediary market (see my postings on Mortgages & Finance) of its intention to suspend any new lending excepting those presently in the pipeline. Whilst the benefits of the rate reductions will benefit existing borrowers on Discount / Tracker and Libor Linked products the potential of shrinking product availability will potentially impact on those seeking remortgages. Still too early to be accurate but I will post market updates as they become available.

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              #7
              Originally posted by Diversity View Post

              It's happened. Lowest in 300 years.........

              Any chance it will go negative?
              The governor of the Bank of England is new, but has said that he's against the idea.

              But, at some point, everything will be on the table if things don't improve.
              When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
              Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

              Comment


                #8
                Negative would be a HUGE line to cross, i don't see it happening personally and it hasn't had fantastic results in Europe BUT in saying that I never would've predicted this situation (virus) and 0.1% base rate

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                  #9
                  Banks & Building Societies, the latter mainly are reliant on lending savers money with a specific percentage being allowed to be raised on the money market, given that the majority of savers money except emergency monies are placed in fixed rate deposits ranging from 1 to 5 years , so before a mortgage rate can be set , administrative, marketing and procurement costs have to be taken into account and an element of profit for the provisions of further lending. If as evidenced by the actions of some of the relatively new lenders there is difficulty in capital raising in the institutional and money markets then there is a line which rates cannot go below so do not expect Fixed rate offerings being much lower than at present.
                  The property market works on confidence , tightening of lending criteria or restrictive rates undermines this and negativity comes to the fore so I would prefer rates to stay as they are so we can avoid such occurrences.

                  Here endeth the Mothering Sunday sermon. Being isolated leaves me time to ponder the “What Ifs”

                  Comment


                    #10
                    Interest rates have been effectively negative for the past 12 years if you consider inflation.

                    Comment


                      #11
                      So true but the money required to buy has still to be earned and paid.

                      Comment


                        #12
                        Originally posted by Diversity View Post

                        It's happened. Lowest in 300 years.........

                        Any chance it will go negative?
                        You can argue that it's 'technically' negative already if you look at the inflation rate vs the interest rate.
                        Bearing in mind that inflation rates are heavily massaged in order to exert downward pressure on them so we don't get too annoyed and start burning things.

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                          #13
                          I think that for the next few months , attention should be made regarding what products are indeed available for specific loan to Values irrespective of whether it is a residential mortgage or BtL.
                          As I have posted in recent days , lenders have become cautious on the loan to Values , the exclusion of variable additional income above the basic income etc which in turn will have a serious impact on the affordability matrix .

                          Whilst lenders are indeed beginning to lower their Standard Variable Rates , rates for remortgaged are good but do not fully reflect what one might believe to reflect what the BoE base rate.
                          Remember also that for Remortgage lenders are using AVM’s and that in itself might produce valuations which could well be below the value that pre Coronavirus days would have suggested.

                          I am confident that in a few months time when normal service is resumed and confidence returns to the market that lenders will start to increase product offerings, after which may come an increase in Loan to Values and the re-entry of those lenders who for the present have had to withdraw from lending because of a lack of institutional funding.

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