Vishala Sri-Pathma and Abi Smitton
Business journalists
Bbc
Jon and Becky Ball say that the drop in rates can help their mortgage, but has hit their savings
The Bank of England reduced interest rates Thursday from 4.75% to 4.5%, the lowest level for more than 18 months.
The lower rates can reduce the cost of the loan, but this could also mean a drop in saving yields.
The BBC spoke to borrowers and savers of the way in which the drop in rates will affect them.
“Our mortgage can increase by £ 125 per month”
The Ball family has lived with their house for 11 years
Becky and Jon Ball, both 40, live in Selby, North Yorkshire with their daughters, Sophie, 12 and Emily, nine, and their dog Bertie.
Becky works in Finance and Jon is a truck driver.
They have lived in their house for 11 years and their term at the end of five years ends in April.
They are currently faced to pay an additional £ 125 per month, payment from £ 460 to £ 585.
Becky hopes that the drop in rates means “our rate that we obtained at the minute would drop so that we can go to a better pace before April”.
“We have already had discussions on what to reduce to make sure that we can meet the additional cost.”
But Jon says that the drop in interest rates will also reach their savings. “These are swings and roundabouts, you win with one, you lose with another. It’s a really difficult time for everyone.”
‘I earn £ 40 less on my savings’
Craig Mountainne in Yorkshire has around £ 35,000 savings in savings accounts and premium bonds.
He says that when the prices were at their recent 5.25% summit, he earned 4.75% on his savings, therefore about £ 180 per month.
It now earns 4%, which it plans to fall to 3.75% once the last cut is taken into account, which is equivalent to around £ 140 per month.
“I’m probably trying to lose £ 40 per month from the summit (today),” he said.
“As a 55-year-old semi-retired player, this additional income from savings interests allowed me and my wife to live rather than simply survive.”
“ My mortgage could increase by £ 1,000 – we need more rate drops ”
Gino Rocco
Gino says that it becomes unaffordable to live in London
Gino Rocco, 59, and his partner Robert have a fixed rate mortgage of five years which ends in August.
They are currently paying just over £ 2,000 a month on their Newbuild dish in London Bridge. This could increase by £ 1,000 depending on the agreement they manage to land.
It welcomes the drop in interest rates and hopes that they will continue to decrease in time for the moment when its mortgage is renewing.
But he knows that they will always face a significant increase.
“We will have to make changes. I am aware that for others, it will be much worse,” explains Gino, who works like an internal lawyer.
He adds that his service costs, his heating and water bills have also increased.
“It was comfortable but with everything else, it is almost affordable now.
“It’s not just low -income people who are struggling.”
“The interest rate on my credit card is 23% – a drop of 0.25% is not sufficient”
Subbu
Subbu is concerned about the debt of the credit card he accumulates
Subbu, 48, lives in Dorset with his wife and children.
When the interest rate on its mortgage increased from 2.1% to 5%, its monthly reimbursements increased by £ 1,000.
His current mortgage is being renewed in 2028, he therefore now uses a credit card to pay the cost increase. The interest rate on its credit card is 23%.
A drop in the percentage point of rates is not useful enough, he says.
“It’s really difficult for the moment, I find that all money is going on our basic life needs and we really don’t have many remains at the end of the month.”
Subbu speaks to a broker to free up equity from the house to reimburse his credit card. This could mean higher reimbursements on the mortgage, but he believes that this could be a better solution because it is reimbursed over a longer period compared to a credit card.
“It was very stressful, I do not know how the others will manage. I hope that when we demonstrate again, the prices are much lower.”
