Bank of England interest rate cuts
As widely expected, the Bank of England cut base rates to 5% today but it was cold comfort to lots of us with mortgages, as lenders continued to withdraw fixed rate loans, raise the interest rate on the same or attach hefty arrangement fees to new mortgages. We’ve seen a succession of Bank of England interest rate cuts over the past few months. Once upon a time attention was immediately turned to the mortgage lenders to see which of them would pass on the savings to their customers, and which of them would simply pocket the difference. No more. I read today that the ‘connection between base rate and mortgage rates has softened considerably’, for which piece of mealy-mouthed euphemistic jargon mean ‘they’re charging us more for cheaper money’.
Perhaps one shouldn’t pick on a single institution when they’re all at it, but the Nationwide’s timing was particularly unfortunate. The institution that now dubs itself Britain’s biggest building society (because all the bigger ones turned themselves into banks in order to play at making ‘real’ money during the 1990s) announced just hours before the Bank’s announcement that its fixed rates would rise 0.32%. Its 5.83% five-year fix at a £499 fee for those with a 25% deposit, has now become 6.15% with a £699 fee.
As ever, the cruel irony is that the less attractive the borrower (for which read ‘poorer’) the higher interest they will pay. It’s not just about ’sub prime’ borrowers who really shouldn’t have been told ‘yes you can afford to buy a house’ when they palpably couldn’t. Many thousands of buyers who stretched that just little bit further to get onto the UK property ladder, and who could just about afford their monthly mortgage payments, are now about to get their fingers prised from the rungs.
