Base rate review, update
Base rate review, update
We will start our base rate coverage this month with a review of the last Monetary Policy Committee (MPC)meeting. This is where the decision is made each month to hold, raise or lower the Bank of England base rate, which ultimately affects the interest contractors are charged on mortgages, savings and loans.
Last month nine members of the committee were present. I have also indicated how they voted.
Mervyn King, Governor (Hold)
Charles Bean, Deputy Governor responsible for monetary policy (Hold)
Paul Tucker, Deputy Governor responsible for financial stability (Hold)
Spencer Dale (raise 0.25%)
Paul Fisher (Hold)
David Miles (Hold)
Adam Posen (Hold)
Andrew Sentence (raise 0.5%)
Martin Weale (raise 0.25%)
If you are a contractor looking for a mortgage, rates will be at the top of your agenda. Contractor mortgages, like all mortgages, will be affected if the base rate goes up, so it is important to monitor the MPC's decisions.
So we had a vote of 6/3 to hold it at 0.5%. Depending on your financial situation you are going to have a preference for which way you want it to go. The way it will go will depend on the decision making process of the MPC and they have expressed a desire to raise it but have not given an indication as to when.
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In other news Woolwich has announced that it will be reducing its offset mortgage rates by up to 0.5%. The rates on their 75% LTV product will be reduced to 2.59% above base rate, making it a highly competitive mortgage product.
Head of Mortgage Products at Barclays, Laoiseach Lynch, commented:
"As the tax year draws to a close, now is a great time for borrowers to take stock and assess how they can make their mortgages and savings work together to limit the impact of tax and inflation. Offsetting is the most tax efficient way to manage both savings and a mortgage so it makes sense for borrowers to look at these options. Also, the added benefit of repaying your mortgage earlier could save you money in the long run, which is good news in any economic climate."
As a company that is known to be contractor friendly it is encouraging to see rate changes that will create demand.
Contractor mortgages are niche products that require specialist understanding, which is why we have developed great relationships with senior underwriters. We use our relationships to deliver the service that you deserve when looking for a contractor mortgage
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