Article: Home Loan Interest Rates
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Home Loan Interest Rates
If there's one thing that homeowners with a variable rates home loan fear most it is hearing that their loan company has increased their home loan interest rates. Home loan interest rates tend to fluctuate in line with the base interest rate set by the Bank of England. The base interest rate is the minimum amount of interest banks charge for lending money, and it is governed by many economic factors, not least inflation targets.
When the Bank of England increases base interest rates, home loan companies decide whether to absorb the cost of the rates increase or pass the rates increase on to homeowners with a home loan. Quite often, home loan companies employ the latter scenario, increasing home loan interest rates to compensate for the rise in base interest rates.
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