UK interest rate cut to three per cent - The difference it will make to UK consumers

A shock result from the Bank of England as they cut interest rates by one-and-a-half percentage points, the lowest base rate since 1955.

Initially the news was welcomed by millions of homeowners as they have been struggling with high mortgage repayments. However as mortgage lenders base they lending rates on the rate they lend between each other, called Libor (London Interbank Offered Rate), some providers may not pass on the rate cut in full as the Libor is currently much higher than the UK base rate.

Banks didn’t expect such a big cut from the Bank of England and their mortgages are currently under review as they ponder what rate to reduce their offers by, if any!

The good news for UK mortgage holders is many of the mortgage lenders have now announced they will be passing on the base rate cut and in full to their customers.

As a mortgage holder it is worth checking with your provider to see the rate they are now offering you. Those with tracker rate mortgage that are linked to the bank of England base rate can expect to save around £134 on an average £150,000 mortgage.

Those on standard variable rate mortgages are advised to search the market now, as you can see from our example, hundreds of pounds per month can be saved on your mortgage. The standard variable rate is the rate you provider normally transfers you to after your current fixed or tracker mortgage deal has ended. You definitely don’t want to be on this rate as it can be over 7%, some charging over 10%.

Using a mortgage broker will allow you to quickly and easily search the market, using a mortgage broker that offers whole market advice will ensure the best deal is found for you. Whether you want a Fulham mortgage or a Falkirk mortgage, a mortgage broker can help save money but will also be clued up on the market to offer valuable advice.

Even those on a tracker mortgage that are benefiting from the full rate cut can save even more by comparing the market as more choice is now available.