The Bank of England’s recent decision to cut the base rate by one percentage point dominated the weekend money pages, as finance writers assessed the consequences for borrowers, savers and investors. As noted in the Times, around 3.6million borrowers will see their monthly mortgage repayments fall, after the base rate was cut to just 2 per cent- it’s lowest level since 1951. The Observer advised borrowers to resist the urge to splurge what they have saved, and instead overpay their loans each month. The Sunday Telegraph had a guide exploring the ways in which borrowers can take advantage of the current mortgage market. The Times also reported that not everyone with a tracker will benefit from the latest cut. About 600,000 borrowers, including those with Yorkshire, Norwich & Peterborough, Chesham and Darlington building societies will have their mortgage rate frozen at the existing level. These mutuals have ‘collars’ in the small print of their loans, which enable them to stop reducing rates once the base rate falls below 3 per cent. Several other newspapers looked at ‘collared’ mortgages and experts explained that different lenders have different approaches to product pricing and features, so borrowers need to check the small print on their mortgage documents.
Elsewhere, the Sunday Express looked at the new proposals which will allow out-of-work homeowners to put their mortgage interest payments on hold for up to two years. The Independent on Sunday revealed that some lenders are questioning whether or not they can continue to offer retention rates below SVR and whether they should make borrowers coming off a fixed rate pay a premium or SVR.