Like most of the people in the UK (apparently) I owe lots of money to the bank. Not that I borrow money on a regular basis or that I overdraw my credit cards, but rather I had borrowed hundreds of thousands of pounds a few years ago so I could buy a house. Which basically means I’ll be spending most of my working life paying it back. Anyway, so like everyone else who’s in debt, I keep an ear out for what the Bank of England Base Rate is doing and always feel better when I hear it’s going down!
Well, according to some experts, the Base Rate may drop as low as 4%. And that’s pretty good news for anyone who has borrowed money. Basically, a 0.25 percentage point rise, for example, would push down monthly repayments on a £150,000 interest-only loan down by £31.25 – or £375 a year. So you can see how a drop of 1.5% can be really helpful to anyone who has borrowed money (or is looking to borrow money). Basically, if you’re planning on borrowing money for Mortgages or Secured Loans, then the lower the interest rate; the better.
A drop in interest rates isn’t good for everyone of course. Besides mortgage rates dropping it also means that savings rates drop. This means that people who are cash positive and have money in the bank will be getting less interest on the amount. But, I guess, some people win and some others lose.
What about you? Do you have owe more money on your mortgage .. or are you cash positive and are living off the interest on your earnings?