Interest rate history for the UK
Getting to know the bank interest rate history for the UK isn't necessary for those looking for home mortgages. However, it helps, especially with variable mortgages and for deciding whether fixed loan rates being offered are fair. It's not everyday that one goes around to mortgage finance companies for a loan to buy a house. So, do some research and get to know the best mortgages that lending firms can offer.
MPC
Sitting at the apex of the UK's interest rate deciders is the Bank of England's Monetary Policy Committee (MPC). The MPC decides interest rates during its monthly meeting on the first Thursday of each month. The rates are announced at 12 p.m. immediately after the meeting. This rate is important for all parties with a stake in residential mortgages, home equity rates and new house loans, including the banks, brokers, real estate investor funds and homebuyers and homeowners.
SVR
The interest rates offered by lenders are pegged to the MPC rates. It won't be the same, but it go up and down along with the MPC rate. So, if a lender has offered variable mortgages to customers, they will have a standard variable rate (SVR) pegged a little above the MPC rate. If the MPC rate drops, the lender will likewise lower the SVR. If the MPC increases its rate, the SVR will go up too.
Impaired credit
While the rates offered to those with impaired credit will also follow the MPC up and down, there's more of a disconnect as compared to ordinary home mortgages. Variable rates for customers with impaired credit are often jacked up quite a bit above the MPC rate, and it won't come down as fast as other normal interest mortgages. It will, however, go up if the MPC rate climbs. Lenders justify this sort of unfair rate setting practices by citing the extra risk that they take.
Forecasting
A big part of taking out variable mortgages has to do with forecasting what rates one will be paying in future, and how much the house will end up costing by the time the mortgage is paid in full. It's easy with fixed loan rates, but with a variable mortgage, all sorts of calculations need to be done to figure out which is the best deal on offer. There are mortgage calculators available that can help with this.