What the papers say - 8th and 9th November 2008

The weekend money pages were packed with rate cut news and what it all means for borrowers, savers and investors. Most newspapers looked at the winners and losers in the mortgage realm and various case studies highlighted the relief felt amongst those with existing tracker deals. The Daily Telegraph noted that the Bank of England’s shock decision to cut interest rates by 1.5 percentage points was the biggest reduction since 1981 and leaves rates at their lowest level since 1955. Along with the Times and the Independent, the paper looked extensively at the winners and losers in all this. Experts said that while it may be tempting to pocket any savings made, it makes sense to consider using some or all of the money to pay off the loan quicker. The Times also revealed that several of the UK’s biggest lenders prohibit rates from falling below a minimum threshold, or ‘collar’, so borrowers are advised to check the small print. Fortunately, some lenders, including C&G, Alliance & Leicester and Woolwich, do not restrict how far tracker rates can fall. The Observer explained there was bad news for new borrowers, as many lenders including Northern Rock, Lloyds TSB and it’s C&G subsidiary, Alliance & Leicester and Woolwich anticipated the cut by withdrawing existing tracker mortgage ranges earlier in the week, followed by Nationwide after the announcement. Experts warned that it may be dangerous for homeowners to wait to remortgage if house prices are falling, as their loan-to-value may have increased, meaning they can’t get the better rates.  Prospects for those needing a new mortgage are unclear but hopefully, new deals will be released this week.

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