BOE and LIBOR Interest rate changes….
Following last weeks 1.5% base rate cut by the Bank of England, the cost of inter-bank lending also decreased quite dramatically by falling over 1% to 4.49% on Friday of last week.
The LIBOR, the rate at which the banks lend to each other, is related to the cost of mortgages to customers, and we are hoping that this latest fall may result in cheaper borrowing for customers, especially since the recent reduction in the Bank of England base rate had a lesser impact on borrowing costs as some would have hoped.
Those customers on Base Rate Trackers will be very pleased with the rate reductions, and those customers coming out of 2 and 3 year fixed rate mortgages should also be more relieved that the payment shock they were all expecting “should” have been reduced by this action. Fixed rate mortgages currently in place will of course be unaffected, the main obvious reason for a fixed rate mortgage of course!
The Council of Mortgage Lenders have been quoted as saying that that the “Libor was more important in determining the cost of mortgages than the Bank of England’s rate”, so lets see how these rate changes effect the product ranges of mortgage lenders.
Only time will tell!
Shane Beardsley
Managing Director / Independent Financial Adviser
Tags: base rate, boe, interest rates, libor