Base rate cut good news for tracker mortgage holders

Yesterday`s base rate cut announcement has had some positive effect on the mortgage market, despite a mixed reaction to the Bank of England`s latest measure aimed at fighting the recession.

Many homeowners with tracker mortgage deals automatically had their interest rates reduced - effectively freeing up cash to save, spend or put towards their mortgage debt.

But tracker mortgages weren`t the only ones to benefit. As one example, Nationwide Building Society announced that its BMR (Base Mortgage Rate) would fall from 3% to 2.5% on 1st April, further reducing outgoings for many of its customers.

However, some homeowners will not receive any benefit from the base rate cut - because their tracker deal has reached its `collar` (the point beyond which the rate cannot fall), because their lender has not `passed on` the rate cut to their Standard Variable Rate (SVR) mortgage, or simply because they are on a fixed-rate deal.

A spokesperson for debt management company Gregory Pennington said: "Although many lenders will not be cutting their interest rates in line with the base rate cut, the rates of many existing tracker mortgages will automatically be cut, so some people are sure to benefit.

"It`s a good idea for them to put at least some of the money saved towards their mortgage debt, helping them pay off their mortgage more quickly."

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Gregory Pennington offer debt management plans as well as a range of other debt solutions. If you are worried about debt, contact one of our expert debt advisers now.