Are lenders expecting an interest rate cut?

Are lenders expecting an interest rate cut?

Much of the attention has been on fixed rates lately, with long-term rates falling to record lows. With increased uncertainty following the vote to leave the EU, it’s no surprise that many people are looking for stability.

But just as interesting are the changes we’re starting to see with tracker mortgages. Bank of England Governor Mark Carney has already indicated there may need to be some “easing” of monetary policy – widely interpreted as suggesting Base Rate may come down, though that’s not the only route they could take.

Four major lenders – Coventry BS, Halifax, BM Solutions (Halifax’s buy to let arm) and Santander – have announced increases or completely withdrawn tracker rates in the last few days. In Coventry’s case some are going up by as much 0.46%.

What does this tell us? As Base Rate goes down lenders often increase tracker margins to protect their income, and try to shield savers. So these moves suggest lenders think the Bank of England could well cut Base Rate before long – perhaps even this month.

Of course this is only a few lenders (so far) out of 50-odd and no-one’s suggesting they have any special knowledge, but it’s a sign that sentiment among lenders may be starting to firm up.

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