Bank of England Reduces Interest Rates to 3% – Stop Repossession?

Last Thursday the Bank of England surprised everyone by making a huge cut in the interest rate. From 4.5% to 3%. Does this mean that the danger of being repossessed is less than before?

Not at all – here’s why:

Once upon a time the Bank of England interest rate meant something to banks. If the BoE rate was 5% then they would probably charge something like 5.5% for your mortgage. This should mean that now the rate is 3% that your mortgage payments might fall to 3.5%?

Wrong.

Since the credit crunch started the banks have drifted so far away from the influence of Bank of England rates that the cut is virtually meaningless. Even with Alistair Darling putting pressure on banks to pass on the cuts, this will not help those on current fixed rate mortgages who are struggling to pay mortgage arrears and are in fear of a possession order or bailiffs warrant.

This rate cut is for new mortgages only, and if you have arrears on your mortgage then right now no lender is likely to give you a new product and certainly not at rates like 3.5%

In fact the banks as always have it their own way. Although they are now using our taxpayers money, most banks have clauses in their mortgage agreements that mean that if the Bank of England rate falls below a certain point they do not need need to reduce their rate to you. Instead, they make more profit at your expense.

Does the low interest rate mean that houses will start selling again?

Not really, because the banks have instructed their surveyors to down value properties for mortgage lending. So sellers are not getting their asking prices and many buyers are not getting the amount of mortgage they need to buy at the seller’s price. So this way the banks pay lip service to reducing interest rates but in reality they just lend much less money at that rate. Right now the banks are happy to sit on our cash and do nothing with it.

If you are locked into a mortgage agreement at high interest you have very little option but to struggle to pay each month and hope that the credit crisis comes to an end before you run out of money or worse, lose your job due to the recession.

If you want to find out more about alternatives to repossession please click here to find out more

More Reposession & Negative Equity Information

• Repossession and Rent Back Search Terms
• I Buy Houses in Hertfordshire! Houses For Sale Needed Urgently
• Price of auctioned homes falls 25% in a year
• I Buy Houses in Hertfordshire
• Using a Form N244 to Stop a Possession Order