The Bank of England cutting the official interest rate from 0.5 per cent to 0.25 per cent has meant that the mortgage bill for millions of borrowers will drop, with Mark Carney, the Bank’s governor, saying banks have “no excuse” to not pass on the rate cuts to borrowers.
It has been reported that the interest rate cut will take off £22 from a typical monthly mortgage, although there are only 1.5m mortgages which automatically track the Bank of England’s rate. The 3.5m borrowers with a variable-rate mortgage may also find their rates realign to match the Bank’s interest rate, according to the Council of Mortgage Lenders.
Those who have a fixed-rate mortgage (which is around 50 per cent of all mortgage holders in the UK) will not see a change, however.
The Bank of England’s decision received unanimous approval from all nine members of the Monetary Policy Committee (MPC), and it is the first time since March 2009 that the interest rate has been changed.
Meanwhile, Halifax, the largest mortgage lender in the UK, has revealed that the growth of house prices appears to be slowing.
House prices in July dropped 1 per cent on the previous month, although they remain 8.4 per cent higher than the same time last year.
However, Russell Quirk, founder of eMoov, the estate agency, said: “Although it would seem the UK property market has lost steam since the vote with prices dropping 1% since last month, the summer period is always a traditionally slower time of year for residential property transactions.”