Awaiting news on Bank of England base rate decision
Bank of England base rate changes
Twelve months ago, a mortgage borrower could pick and choose from in excess of 15,000 mortgage products and handed an advance of 125% of the actual property value.
Most mortgage providers now have a reduced appetite to lend, credit scoring has been adjusted to reflect a general image of today's household expenses and borrows are requiring a deposit, of between 20 and 25 percent, at best.
The last
resort for a growing number of borrowers is reverting to their lender's
standard variable rate and it is not unreasonable to predict that a majority of
borrowers will be left with only this option during the next six months, if
markets do not improve.
Standard
variable rates have historically been seen as being unfashionable and generally
only associated with borrowers who have around £5,000 left on their mortgage.
Hence, lenders have generally ‘toed the line' in adjusting their Standard
variable rates in line with base rate changes.
Subsequent
to the base rate reducing to 5.00% in April, 38 lenders did not pass on the
full 0.25% cut and 15 of these lenders did not reduce their Standard variable
rates at all.
Bank of England Base Rates
| Date | Jan 07 | May 07 | Jul 07 | Dec 07 | Feb 08 | Apr 08 |
| Rate | 5.25% | 5.50% | 5.75% | 5.50% | 5.25% | 5.00% |
| Change | 0.25% | 0.25% | 0.25% | -0.25% | -0.25% | -0.25% |
We hope, under the current economic climate, that the polls are correct and no base rate change takes place on Thursday and stays at 5.00%, otherwise an increase might give lenders the opportunity to adjust their Standard variable rates well above the base rate movement and wipe out any option of a reasonable last resort.
Related links:
Other Articles:
- HBOS & Lloyds - Are your savings safe?
- Britons scrapping summer holidays
- Britons reduce savings as credit crunch starts to bite
- Moneyfacts.co.uk consistent savings survey (July 2008)
- Fixed Rate Mortgages Reaches 10 Year High
- Bank of England reduces bank rate by 0.25 percentage points to 5.0%
- Economy July 2006
- Lending to individuals
- Inflation – Consumer prices index
- Bank Base Rate - Effects of an Increase
- Economic Optimism
