Martin Lewis has offered some key advice on what to do with the Bank of England imminently expected to slash the UK base rate from 4.5 per cent to 4.25 per cent. The Bank of England’s website says the base rate is ‘the single most important interest rate in the UK’ and is the interest rate that the central bank charges to other banks and lenders when they borrow from the Bank of England.
Some economists predict the base rate may even be slashed to 3.5 per cent at the start of next year, while others even think rates may drop to as low as three per cent. In layman’s terms it can be incredibly beneficial for those looking to buy a new or bigger home, or even re-mortgage.
This is because while variable rates (an interest rate that fluctuates over time, typically based on market conditions) tend to move with UK base rates, lenders (banks and building societies) usually set intro rates based roughly on what the market expects the borrowing cost to be over the period fixed.
The money mastermind added that it’s also possible that fixed mortgage rates will fall further. But he clarified that MoneySavingExpert has spoken to brokers and they say further substantial fixed cuts are not guaranteed, and it is always possible sentiment could move the other way.
Despite the circumstances they all pointed out right now is a decent time to get a mortgage, as approvals are down and there's a negative economic outlook, so lenders are trying to offer better deals and generous loan sizes.
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