Historic interest rate cut

Bank of England cuts Base Rate to 3%

The Bank of England has made another emergency cut in interest rates, taking them to 3 per cent. With the UK recording a fall in economic growth of 1.5 per cent in the third quarter of this year, this emergency reduction is seen as essential to minimise the all-too-inevitable recession. Experts expects further rate reductions in coming months.


Tracking the Base Rate

With fewer than half of all mortgage lenders passing on the previous half-point base-rate reduction via their standard variable rates (SVRs), borrowers need to take care when re-mortgaging to another deal.

Lenders withdraw all Tracker products
Inevitably, all the major lenders have now withdrawn their Tracker products, those that had any left, and so there are no tracker products left on the shelf. They will now be pondering this situation and will announce a new range of Tracker products, probably early next week.

A discounted-variable rate may seem as good a bet as a base-rate tracker but discounted products are linked to the lender's SVR, which is set at its own discretion. As we saw last time rates were cut, there is no compulsion on the lender to pass on any of the reduction. A tracker is more transparent as the margin with base rate remains the same so your monthly mortgage payments fall accordingly.
Expect Fixed Rate products to fall shortly, but not having the full rate reduction applied. Lenders have to maintain the differentials to maintain their own liquidity margins.