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Bank of England Interest Rate Cut

Published at: 09/08/2016

Last Thursday the Bank of England slashed its base rate in half from 0.5% to a new all-time low of 0.25%.

The Bank also announced additional measures to stimulate the UK economy, including a £100bn scheme to force banks to pass on the low interest rate to households and businesses.

Here is Jackson & Co's assessment of what this move could mean for the local housing market in Colchester.


For ordinary homeowners this rate cut could mean more money in their pockets, or to pay other bills. However, this depends on the type of mortgage you have.

Lower interest rates mean those with variable rate mortgages might enjoy cheaper monthly payments. If your mortgage interest rate tracks the base rate, you could be laughing as your monthly mortgage repayments will likely drop to reflect a lower rate.

Any cut will of course be up to the lender. Some lenders may pass on the cut in full, some may decide on a partial cut, others may make no change at all, although a handful of banks quickly announced that they would pass the cut on in full from September, with others expected to follow suit

Bank governor Mark Carney made his feelings very clear when he firmly stated that banks had "no excuse" not to pass on the cut to households.

Those on fixed rate mortgages unfortunately will see no change. However, if their mortgage term is up soon, they may find they pay less if and when they sign up to a new mortgage.

Buy-to-let Investors

Strong demand and an interest rate cut are a great combination for buy-to-let property investors and would mean a better yield on their investments. Interest rates going down effectively means that buy-to-let profit margins have gone up overnight.

Ray Withers, chief executive of investment firm Property Frontiers, predicts: "The UK continues to have a severe housing shortfall, meaning demand for new homes is set to remain strong for years."

In Conclusion

The Bank of England's interest rate cut is a good news for property owners, and future property owners, in Colchester with variable rate mortgages, and buy-to-let investors will see a net gain.

As an independent estate agents, to help you find the mortgage product that best suits your needs Jackson & Co offers a bespoke personal financial advisory service through our preferred outsourced provider who has access to the whole of the market. As such they offer quotations and products from a range of lenders, from the high street to more bespoke lenders, depending on the client's requirements and circumstances.

You can find out more about our financial services HERE.

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