1.5% cut in B of E base rate – shock!

Well, that was a surprised and it’s being talked about everywhere.

I’ve had e-mails this afternoon from almost every lender stating that they are withdrawing all their tracker products, although I did swap one lucky client onto the outgoing products with minutes to spare – most lenders gave an hour or so’s warning to act, with TMW the worst at 9 minutes and Woolwich second worst at 20 minutes.

I’m on a fixed rate  oh well, it was the right thing to choose when I chose it.

What does this mean for people?

Well, savers will suffer more, although ISA’s still offer some good rates and stock market based ISA’s will be exciting for those with an appetite for risk – in the future I bet people will consider this period as a great buying opportunity.

Borrowers on fixed rates – no chnage

Borrowers on variable rates – no news yet, although C & G sent an e-mail out yesterday saying they’d honor the drop.

Borrowers choosing a new mortgage now – well, no answers, after todays list of product withdrawals, it’ll be better to wait a week or so. But, there are decent fixed rates available, but they are decent by last weeks’ standards.

The people who will really benefit are existing tracker mortgage customers and businesses – commercial finance is often set up as a margin over BBR. That will aid ongoing employment and will help many more people stay in jobs – and that is the real benefit. Sadly, no employer is goin to say ‘John, you’d be redundant if it wasn’t for my business finance getting cheaper’ so in general we’ll carry on being a bit disatisfied about rate cuts not being passed on properly and never know the true benefit.

The other aspect to this is that amongst the chatter is an overwhelming view that the cuts won’t be passed on – so the banks will know it’s kind of expected, so they will be judging how much they can get away with – and we’re all saying ‘they’ll only pass on a bit of it, that’s what they’ll judge is OK – a self fulfilling prophesy.

Fingers crossed it starts working out soon!