What’s happening to interest rates?
Last week’s announcement that the Bank of England was slashing the base rate from 0.75% to 0.25% is good news for many mortgage holders, writes Ruth Jackson-Kirby. Several big banks including Santander, Lloyds and Halifax swiftly moved to cut their own rates to reflect the drop. Homeowners on a tracker mortgage or their lender’s standard variable rate should see a fall in their repayments from April.
Should I remortgage?
Nonetheless, the drop in the base rate doesn’t mean now is the time to remortgage. Some top lenders have actually hiked rates on their fixed-term mortgages, as Adam Williams points out in The Daily Telegraph. HSBC has increased the rate on its fixed-rate mortgages by as much as 0.1%; Accord Mortgages and Leeds Building Society have also hiked the price of their fixed deals. “Rates have been so low for so long that lenders have seen this as a way of boosting margins,” Colin Payne of financial planner Chapelgate told The Daily Telegraph.
What if I can’t make my repayments?
While the interest-rate cut may help some mortgage borrowers, many more will be under financial pressure as a result of coronavirus. As more and more people self-isolate they may only get statutory sick pay or go unpaid. This could leave many people worrying about how they will meet their mortgage repayments. The government has now announced that all homeowners can claim a three-month repayment holiday from their mortgages if they are unable to pay owing to the coronavirus.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
“It has not been clarified how eligibility will be decided,” says Adam Williams in The Daily Telegraph. “However, those banks which have already offered payment holidays allowed both those who have the virus, and those who are healthy but have suffered a loss in income, to claim.” A payment holiday means you can take a break from paying part or all of your monthly total. While this is known as a payment holiday, it isn’t all sunshine. Interest will still accrue so “homeowners will see monthly bills rise slightly when they resume payments”, says Anna Mikhailova in The Daily Telegraph.
What is forbearance?
One term cropping up a lot is forbearance. When it comes to your mortgage, this means an agreement between you and your lender to delay mortgage payments because of financial hardship. It could entail reducing or delaying your payment, or increasing the term of your mortgage. If you are worried about being able to make your mortgage repayments, speak to your lender immediately.
-
Christmas at Chatsworth: review of The Cavendish Hotel at BaslowMoneyWeek Travel Matthew Partridge gets into the festive spirit at The Cavendish Hotel at Baslow and the Christmas market at Chatsworth
-
Tycoon Truong My Lan on death row over world’s biggest bank fraudProperty tycoon Truong My Lan has been found guilty of a corruption scandal that dwarfs Malaysia’s 1MDB fraud and Sam Bankman-Fried’s crypto scam
-
Act now to bag NatWest-owned Ulster Bank's 5.2% easy access savings accountUlster Bank is offering savers the chance to earn 5.2% on their cash savings, but you need to act fast as easy access rates are falling. We have all the details
-
Moneybox raises market-leading cash ISA to 5%Savings and investing app MoneyBox has boosted the rate on its cash ISA again, hiking it from 4.75% to 5% making it one of top rates. We have all the details.
-
October NS&I Premium Bonds winners - check now to see what you wonNS&I Premium Bonds holders can check now to see if they have won a prize this month. We explain how to check your premium bonds
-
Bank of Baroda closes doors to UK retail bankingAfter almost 70 years of operating in the UK, one of India’s largest bank is shutting up shop in the UK retail banking market. We explain everything you need to know if you have savings or a current account with Bank of Baroda
-
How to earn cashback on spendingFrom credit cards and current accounts to cashback websites, there are plenty of ways to earn cashback on the money you spend
-
John Lewis mulls buy now, pay later schemeThe CEO of John Lewis has said the retailer will consider introducing buy now, pay later initiatives for lower-priced items.
-
State pension triple lock at risk as cost balloonsThe cost of the state pension triple lock could be far higher than expected due to record wage growth. Will the government keep the policy in place in 2024?
-
Paragon raises rate on one-year fixed cash ISA to 5.75%Paragon Bank ups its one-year fixed cash ISA rate to 5.75% - is it enough to top the table?
