A recent report has indicated that many borrowers and homeowners could benefit from the 0.25% interest rate cut announced by the Bank of England earlier this month, as nine out of the ten top lenders quickly announced that they would be passing on the full 0.25% cut to borrowers – some announcing this within hours of the Bank of England announcement.
It is thought that some of these lenders took such quick action because they received severe criticism in December for failing to pass on the full benefit of the previous rate cut to borrowers. One industry official stated: ‘They have rushed to deflect any criticism.’
Although those on fixed rate mortgages will not benefit from the rate cut, many homeowners on variable rate deals will benefit as a result of 90% of the top lenders quickly cutting their rates in line with the Bank of England base rate cut, which could ease the financial strain for many overstretched households.
However, one industry official said that the rate cut may have come too late. He said: ‘The rate cut could still be too little, too late, for some. People are currently paying out 35% of their take-home pay on mortgage repayments, and ten million consumers already feel that their current level of overall debt is unmanageable.’
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