Money writers were quick to offer advice to worried savers this weekend, following the Bank of England’s recent decision to cut the base rate to just 0.5 per cent. Borrowers with tracker mortgages were celebrating once again, whilst experts emphasised the importance of overpaying and noted that fixed rates might now start to be more competitive.
The Daily Telegraph said that for savers who also have mortgage debts, an offset mortgage is becoming a more attractive option, offering up to the equivalent of 5pc interest rate on savings. As a rule of thumb, a saver with more then 10 per cent of their mortgage debt in savings should consider an offset mortgage.
The Sunday Times revealed that banks and building societies have started reducing the cost of their mortgages following the base rate cut, igniting hopes of a battle over fixed-rates. Experts said that five-year and ten-year fixed-rates are a good option for those seeking longer-term stability.
Finally, the Sunday Express noted that a new option for those who do not want to fix their mortgage, to guard against interest-rate fluctuations, is a tracker with a cap. A cap protects the borrower because it means that a mortgage rate will never go above a certain rate and is the opposite of the collar clauses, which stop the tracker rate from falling below a certain level when the base rate falls.