Following the US Fed decision to cut the interest rates big time, the Bank of England has followed suit. The UK based Bank of England has also cut the interest rates by 25 basis points or 0.25%.
The mortgage lenders in UK are pledging that the rate cut will be passed on to the customers but it may take some time. So if someone has a mortgage of value £100,000, his obligations will reduce by around 16£ per month or £192 per year.
However, 55% of UK mortgage borrowers are on fixed rate mortgage, so there will be less impact of this 25 basis point rate cut in UK. There will be rate cuts for other types of mortgages like Tracker Mortgage, but the cut may be less than 25 basis points.
On the other side, the effect of rate is is compensated by other developments in the UK mortgage markets. It is learnt that two of Britain's biggest mortgage lenders, Alliance & Leicester and Britannia building society, have doubled the minimum deposit demanded from first-time buyers in the latest sign that banks are anticipating a downturn in house prices.
| This is the second such rate cut announced by the Bank of England in last 3 meetings. Though the economic analysts have warned that there was unlikely to be further relief for homeowners in short term, despite evidence of a weakening economy, given the Bank's warning yesterday about inflation. All this is leading to only one single destination- the world economy going into a major recession. No doubt, the world is a global village, and everything moves in sync! | Table of Contents |
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