As Tristan at Find Financial Freedom points out, a lot of media analysis of today’s interest rate cut to 1.5% has been negative, focusing on the fact that it won’t mean the banks will lend more to businesses and consumers or get more foreign investment in.
Indeed, my initial thoughts were less than positive, questioning whether it would have any effect, but then I’m just a disgruntled fixed-rate mortgage holder who’s not seen any benefit from any of the cuts. I’m just thankful I haven’t got any savings sitting earning near 0% interest.
So what positive aspect can we take from today’s cut?
Well, as 40% of mortgages are trackers (as far as I recall), then in theory that many mortgage holders will be seeing some sort of rate cut in the coming weeks, along with those on their lenders’ standard variable rates (if the banks play ball). Plus the average mortgage borrower should be paying over £500 a month less in interest than they were back in November 2007, which has got to be good for them, with more money in their pockets, and the economy, where it will (hopefully) be spent.
Of course, they may want to put their extra money into a mortgage overpayment to watch the term of the mortgage and the total interest paid drop away.
What other positives of today’s interest rate cut can you think of? Let us know in the comments.
photo credit: Andy Beez
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