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Interest rates fall to 3%
An interest rate cut was expected, but this week the Bank of England surprised everyone by cutting rates by 1.5% to 3%.
The cut is good news for borrowers on an existing tracker mortgage, and there are about 4m households cheering the news this week. A borrower with a £140,000 interest-only tracker mortgage will see their monthly payments fall by £175 a month as a result of yesterday's announcement.
Another result of the surprise cut was the speedy withdrawal from the market of many of the existing tracker mortgage deals by all lenders.
Tony Rice, of Bedford-based specialist mortgage brokers TMP Mortgage Zone said: "One of the reasons for the interest rate cut was to boost the housing market. But with banks and building societies immediately pulling many tracker deals, it still leaves the options for new borrowers very narrow. The mortgage market is moving at such a speed that even if your current mortgage deal has 3-6 months to run, it might be worth starting to think now about your next mortgage deal."
[ 07-11-2008 ]
