AIBU to think how will the interest rate cut help renters

[Gin96]

The B of E decision to cut interest rates, how is this supposed to help people that rent?

Did they say it would?

They can get a cheaper mortgage and buy?

Er, the interest rate cut is nothing to do with helping specific groups of consumers, especially renters. It's about stimulating the economy, through a combination of increasing consumer spending and promoting business investment. The fact that it does additionally benefit some people like homeowners with variable rate mortgages is kind of a side effect.

It's being done to stimulate the economy and help businesses nothing to do with helping rents
Wont affect a lot of mortgages either as many are fixed rate

We have variable rates mortgages so it helps us.

The goal is to stimulate the economy not help renters.

They can get a cheaper mortgage and buy?

If only it was that easy eh?

@TheFastandTheCurious I know! I was clutching at straws.

@rosie1959 to stimulate the economy, isn’t it to put more money in general families pockets so they can spend more?

Simple answer, it won't.

It's not about renters or home owners. It's about trying to give the whole economy a boost in the current situation.

I don't see how it will help many individuals (and therefore stimulate spending) - overdraft rates are all about to rocket to 39% (regardless of interest rate cut), most people are on fixed rate mortgages/renters, generally the banks never pass on the cuts to anyone borrowing as far as I can see. If they want to stimulate the economy they should try out giving everyone a "universal wage" for a couple of months.

No, it isn't. The purpose is to help businesses which are likely to really suffer as a result of Corona.

We have variable rates mortgages so it helps us.

Didn't lenders write a floor into their products after being stung when rates fell in 2008 ?

It’s not intended to help any particular group of people or families, other than indirectly. It’s to boost a flagging economy and try to keep shops and businesses working, Which May benefit people indirectly, if it means that they keep a job or keep a business viable.

If you have a variable rate mortgage, there will be a benefit now, but those people won’t benefit when the interest rate rises. The rent won’t change as a result of this and you might might equally ask whether it’s fair that people with savings will have even less than they currently do.

Things have to be done to stimulate the economy, or we’re all buggered in a recession.

The point is to make borrowing cheaper, for whoever might borrow - consumers, but really more likely businesses. Availability of cheap credit tends to boost spending by both individuals & corporates.

It won't help many homeowners either - only 11% of outstanding mortgages in the UK are tracker mortgages and they will see an immediate reduction. Only 16% are variable rate mortgages, so their lender may cut their rate. Most borrowers have fixed rate mortgages, so will see no benefit either. They haven't done this to help particular groups of people, it's to help stimulate and boost the economy as a whole.

I’m so glad i’ve been on a tracker mortgage for the last 12 years, I don’t know why people go for fixed rate mortgages when the interest rate is so low?

I'm on a fixed rate for 5 years, as we set our own business up and wanted the peace of mind and certainty of knowing exactly what our mortgage repayment would be each month, knowing it wouldn't change if interest rates suddenly increased. There's pros and cons to everything!

Gin96 because there is no guarantee that it will remain so low, and certainty to some people is more important than the actual figure

The rate cut won’t help them, but renters can get help with the rent if they are out of work or potentially also if they are in reduced hours. Homeowners can only apply for help with housing costs after being out of work for (I think) nine months and then it is only a loan.

Didn't lenders write a floor into their products after being stung when rates fell in 2008

Probably, we have a pre 2008 mortgage and today our rate went down to 0.63%

The rate cut won't help renters and won't help us that much because it knocks a whole £20 off our monthly payment but DP is self employed in the entertainment industry so if concerts and festivals get cancelled, he has no work.

@Gin96 because at a low interest rate, the only way is up... I'm risk averse so fixed for 5 years.

It absolutely won't help renters

It may help btl landlords on variable rates shoulder non payment of rent?