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Low base rate helps people with debt

By Joel Stanier - Financial specialist

9 July2009

Today, the Bank of England`s Monetary Policy Committee (MPC) announced it was keeping the base rate (also known as the bank rate) at its historic low of 0.5%.

The decision, which was widely expected, is good news for some - but not for all.

For example, most people with tracker/SVR mortgages will be paying less than they originally expected towards their mortgage debt every month, effectively freeing up funds they can use to stay on top of their other debts.

Tenants and homeowners with fixed-rate mortgages, meanwhile, will not benefit in the same way, while savers may be concerned that they aren`t getting as much interest on their savings as they had hoped.

A debt expert for Think Money commented: "If mortgage costs remain low, many people will be left with `spare` money each month. It is important that they use that money wisely. For example, they could overpay their mortgage, overpay other debts, or save - it depends on their personal situation."

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Tags: base rate, low base rate, overpay debt, good time to overpay debt, paying debt early, mortgage, fixed rate mortgage, mortgages

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