Mortgages: Base rate cuts might not mean lower repayments

Richard Catlin
18 February 2008

The Bank of England has, as expected, cut interest rates by a quarter of a percent to 5.25%, in a move that is designed to boost the UK's economy.

Whilst this will come as welcome news to millions of home-owners, especially those with Tracker mortgages - who are guaranteed to see their monthly repayments fall - others won't be so lucky.

Most borrowers are on Standard Variable Rate (SVR) mortgages, where any cut in their rate is entirely at the discretion of their mortgage provider. Many of these borrowers are set to be disappointed and face the news that their repayments are unchanged, or will not be reduced for up to three months.

Whilst SVR mortgages are generally adjusted in line with the rate of inflation, some of the UK's biggest lenders are not passing on immediately the full quarter point cut to borrowers, in the wake of fears over the current credit market.

This presents a worrying trend for many borrowers, where mortgage providers don't hesitate to pass on any rate increases, but drag their heels when cuts do occur.

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The housing market itself is a topic of constant discussion and speculation. Trends seem to vary considerably across the UK, with average prices in some areas stagnating or even falling, whilst some continue to rise.

Only by finding out the actual prices that houses in your local area have sold for recently can you get an accurate picture of the trend, and the typical cost of different property types. You can do this completely free using our Neighbourhood Search Service. Search as many postcodes as you like, anonymously and instantly by clicking here.

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