Mervyn King and his colleagues who sit on the Bank of England's Monetary Policy Committee, should have bought a smile to the face of anyone with a tracker or variable rate mortgage.
Todays historic rate cut of 1.5% will reduce the mortgage payments on a loan of £100,000 by about £125. The reason... so all of those £125's can be spent in the shops to help lessen the recession and also to help over stretched households stay in the black. Good news for existing borrowers then.
But what about those on a fixed rate? Well, I'm afraid you traded away the possibility of your mortgage payments falling for the security bought by a fixed rate. But if your mortgage rate is coming to an end, you have your chance to dip your toe back into the new mortgage market.
Let's hope the mortgage lenders already under political pressure to pass on the rate decrease to existing borrowers will offer more competitive rates to new borrowers. Already this week in anticipation of the rate cut, we have seen a host of new more competitive fixed rates on offer from lenders.
"But with rates falling, wouldn't I be mad to have a fixed rate?", this needs to be considered carefully;
As fast as the rates have fallen, they could go up again over the medium term. With the level of borrowing the government has committed to, there is a real possibility that rates may have to be increased in years to come.
So maybe now, borrowers who prefer the security of a fixed rate have the opportunity to secure a more competitive fixed rate mortgage subject to it meeting their current needs and demands.
If you need any help reviewing your current mortgage options, visit our main site, www.oaktreemortgages.com
UPDATE
How funny it was to see Calvin on Sky News! They wanted a mortgage brokers perspective as to how the rate cut was likely to affect mortgage rates.
