Mortgage Savings May Not Be Affected Due To Base Rate Cuts

Posted 2008-01-6

A price comparison website points out that additional cuts to the base rate this year does not mean that homeowners will have a lower mortgage payment.

Following the monetary policy committee (MPC), decision to keep the base rate on hold in January,  David Kuo,  Motley Fool’s head of personal finance, says that the relationship between mortgage payment and this decision taken by the MPC is not ascertained as it yet.

Mr. Kuo further states that Chancellor Darling has encouraged financial service providers to pass on the rate cut which was effected in December to homeowners.

However he further says that those who borrow should realize that this bade rate change is not mandatory or obligatory for mortgage loan providers, and many of them choose not to do so given the current economic situation.

He states that rebuilding their fallen businesses should be the main priority for lenders. As despite of indications that the Bank of England may continue to cut interest rates taking stock of the British economy, many homeowners would not really benefit from this.

Director of advice service Thomas Charles, James Falla is of the opinion that this year will see a rise in personal insolvencies.

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