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Carl Atkinson

3-minute read

Last updated:

October 7, 2020

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On March 19th the Bank of England cut the base rate of interest to a record low of 0.1%.

The move, designed to help businesses and households a result of CoVid 19's economic impact, represents a unique remortgage opportunity for thousands of homeowners in the UK

How does the base rate affect my remortgage?

Lenders use the base rate as a guide that helps them price their range of mortgage deals. Roughly speaking the difference between the base rate and the rate you pay is the lender's profit for providing your mortgage.

There are 3 main types of deal:

Fixed: a fixed rate of interest for the introductory term

The base rate is only a very rough guide to fixed rates.

Variable: a variable rate of interest for the introductory term

These tend to move in line with the base rate, but that is at lender discretion.

Tracker: a type of variable product that tracks the base rate of interest

These change as the base rate changes.

So, what does the base rate change mean for remortgages?

Basically, tracker rates should fall soon, followed by variable rates.

Fixed rate mortgages are by far the most common type of mortgage in the UK and these types of mortgages will not change instantly. Some headline fixed rate products may drop, but they could have large fees associated with them.

The full base rate cut of 0.65% is almost certainly not going to be passed through to the consumer on a deal-by-deal basis.

However, it is very likely that rates will be very low – possibly the lowest ever – in the coming weeks.

Because remortgages can take 3 to 6 weeks, and there is opportunity to change to the lowest rate available to you during the process, now is a good time to see what deals are available.

April set to be 2nd biggest month for remortgages

More than 11% of all remortgages will take place in April. The second biggest month of 2020, with £21 billion of loans maturing. It means that this rate cut is timed when a lot of people will be remortgaging to avoid falling onto an SVR that could be 30 times more expensive than base rate.

How to check if you can save money remortgaging this April?

Base rate cut could mean the lowest remortgage rates ever
It's simple. Use the Mojo Mortgage Matcher to see exactly what rates you can get right now. You can do it from your sofa, there's no need to leave the house and go to any branches.
See your remortgage options now. Full free expert advice available.

The tech takes just 15 minutes and you can even compare the best remortgage rate your current lender can offer you against the remortgage rates of 90 other lenders.

Can you remortgage to a lower rate during a fixed rate deal?


But you need to know if the money you pay due to early repayment charges outstrips the savings you'll make.

Making sense of the base rate cut and the remortgage market

Richard Hayes, CEO and Co-Founder of Mojo Mortgages, said:

“Looking specifically on how this further base rate cut will affect mortgages and lenders, we believe this cut needed to happen in order to increase the margin lenders currently operate within.

“Whilst we don’t expect this cut to be filtered down into a consumer’s current mortgage product, April is set to be the second biggest month for mortgage maturities this year, and despite the pandemic, there will be £21bn of loans maturing and therefore a lot of people will need to remortgage.

“As an online broker, we can help consumers remortgage and get the best rate available for them as we are whole of market – all online and over the phone. And despite the uncertainty in these unprecedented times, those who haven’t managed to sort out their remortgage already in time for April should really look to do it now. Rates are at a historical low, and if it could mean saving hundreds on your current mortgage deal, then it’s a no brainer.”

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