On 8th January the Bank of England cut base rates by 0.5%, bringing base rate down to 1.5%- the lowest figure in its 315 year history.
This time last year base rates were 5.5% and were considered to still be on the increase.
The bank has now reduced rates 4 times since it was at 5% at the beginning of October
However, cutting base rates is not enough on its own to get the economy moving. The biggest problem at the minute is liquidity- banks are just not lending to each other.

What does this mean for your mortgage?
If you’re on a tracker mortgage then you will benefit from the reduction.

However, if you’re on the lender’s standard variable rate (SVR) you need to wait and see whether banks will pass this on. C&G, HBOS and Nationwide have all said they would pass on the full cut to SVR. Halifax cut their rate by 0.25%. But we are still waiting to hear what other lenders plan to do.

Fixed rates by definition stay the same.

This entry was posted on Friday, January 9th, 2009 at 8:48 am and is filed under finance general, interest rates, mortgages. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.