Since the Bank of England base rate has changed, why is this?
Money markets are anticipating that interest rates over the next few years will be slightly higher than now. Given this, the rate that the markets charge lenders to borrow fixed rates has risen and the lenders have simply passed this rise on through their new business products. Variable rates, however, have not been affected. To give you an idea, the Bank of England base rate is 3.5% – but lenders would borrow a two-year fixed rate from the money markets at about 4.3%. Emma Bonham has the DSS paying the interest on her mortgage because she’s getting the Jobseekers’ Allowance. She wants to remortgage to a lower fixed rate because she expects to be paying the interest herself in the longer term. Will the DSS stop paying the interest if she switches the mortgage? No, they shouldn’t. But she does need to make sure that her present mortgage was not taken out before 1 October 1995, as the interest support payments for loans taken after that date are not as generous as for loans taken before
