Page 26 - ESPC_Sept24

EXPERT ADVICE

I have a mortgage – what does this mean for me?
The base rate cut: what happens next?
Here’s what you need to know if you have an existing mortgage:
David Lauder, independent mortgage adviser at ESPC Mortgages,
• For those on a fixed mortgage deal, there’s no change for now
discusses what the base rate cut could mean for you. – but make sure to check rates if your deal is ending soon.
Regardless of what happens to the base rate, the amount you
pay won’t change during your fixed period.
here was good news for borrowers in The decision to cut the base rate comes after
August, as the Bank of England cut the inflation returned to the Bank’s 2% target in • If you’re on a tracker mortgage that ‘tracks’ the base rate,
Tbase rate from 5.25% to 5%. May 2024 and stayed there in June, despite you’ll see your rate come down, with a change to your monthly
stubbornly high services inflation. It was a tight repayments within days or weeks, depending on when your next
The base rate is used by the central bank to decision, and there was a word of caution from repayment is.
charge other banks and lenders when they the BoE Governor, Andrew Bailey, highlighting
borrow money, so the move has already had a the need to ensure that inflation stays low, • If you’re on your lender’s standard variable rate (SVR), the rate
positive impact on mortgage rates, with many and to be careful not to cut interest rates too you pay currently might also come down. You’re usually moved
lenders even offering rate reductions prior to quickly, or by too much. onto your lender’s SVR after your fixed or tracker deal ends.
the announcement being made. SVRs can be changed by lenders at short notice, and this is
The hope is, however, that the positive trend down to their individual discretion.
The base rate reduction is the first in over four will continue, and the Bank of England make
years; the last time was in March 2020, when one or two further reductions in borrowing
the base rate fell to its all-time lowest level costs by the end of the year.
of just 0.1%. The rate then hit a 16-year high
of 5.25% in August 2023 after 14 consecutive This positive news certainly seems to have
increases, before being held at that level until increased activity and enquiries in the property
the 1 August 2024 announcement. market, coinciding with the summer holidays
coming to an end, which traditionally also
provides a spike in activity. The coming
months will provide a clearer indication of how
well-received this news is for existing and new
mortgage borrowers.

Hopefully, this is the first sign of a
positive trend over the months
to come, and new and existing
borrowers alike can feel more
comfortable and confident with
being a homeowner, but only time
will tell exactly how much of an
impact this news will have.

ESPC Mortgages can help with all aspects
of understanding your budget, applying for
a mortgage and dealing with the relevant The information contained in this article is provided in good faith. Whilst The initial consultation with an ESPC Mortgages adviser is free and
without obligation. Thereafter, ESPC Mortgages’ charges for mortgage
every care has been taken in the preparation of the information, no
insurance requirements. You can contact the responsibility is accepted for any errors which, despite our precautions, advice are usually £395 (£345 for first-time buyers). YOUR HOME MAY
ESPC Mortgages team on 0131 253 2920. it may contain. BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A
MORTGAGE OR OTHER LOANS SECURED AGAINST IT.
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