The second charge mortgage market is expected to benefit if banks decide to introduce negative interest rates by introducing the lowest loan rates ever for 2nd charge loans. Various major banks have warned that customers could face negative interest rates if the Bank of England base rate falls below 0%.
Negative interest rates may have a positive impact on the second charge market, which would in turn have a positive impact on the consumer through lower rates. Any reduction in borrowing costs can only be good for the economy as a whole by putting extra money in consumer’s pockets and helping to boost the property market. The second charge market being reliant on economic prosperity and a strong property market should continue to improve lending products and interest rates if base rates are reduced further.
We are already in a low interest rate environment and clearly that makes it a good time to borrow given the rates that are already available in the second charge mortgage market.
If rates do continue to fall, it does not necessarily translate to lower rates for first charge mortgage borrowers as this is not always passed on to the customer. Clearly if homeowners currently have expensive debt now is the time to address the problem with so many advantageous deals on offer.
If you are looking to reduce expensive debt please do contact one of our fully qualified advisers and they will be happy to guide you.