The amazing fall of the Bank of England base rate has created a major divergence between mortgage winners and losers.
Having been cut from 5 per cent last October to its current level of just 1 per cent, the base rate has left some mortgage holders on rates that now seem way too expensive, while others, who have been able to change their rate more recently have benefited substantially.
Some borrowers have even reached the point where they are paying virtually nothing back to the lender in interest payments, making them hundreds of pounds better off than before the base rate started to be cut in response to the floundering economy.
Conversely, some borrowers are still left on interest rates of over 6 per cent ? some even as high as 9 per cent.
Experts have call this ?mortgage apartheid? and say it is a feature of a dysfunctional market. The trend, they say, will intensify.
Most of the winners are those who are on tracker rates which they took out in the mortgage heydays of 2006 and 2007, with the interest rate linked to the Bank?s base rate.
Losers are those stuck on fixed rates from times when the Bank?s next move with the base rate appeared to be upward. Then the sub-prime crisis took over, the economy began to fall apart and the base rate tumbled, leaving those on fixed rates high and dry.
Another set of losers are those who are looking for mortgages now, as there are fewer available, with banks more careful than ever before about whom they lend to.
