Well the last week has seen several interesting developments in the mortgage world.

Firstly, the Bank of England has slashed the _base_ rate by 1.5%, meaning the _base_ rate is now only 3%.

This should be particularly beneficial for anyone currently on a tracker but is unlikely to have a direct effect on new rates. However many lenders have passed on this cut in the form of a reduction in their Standard Variable Rates.

Secondly, as a result of the _base_ rate cut, the 3 month LIBOR rate has been cut by 1%, now sitting at just below 4.5%.

The LIBOR rate is the rate at which banks lend to each other and will have a direct effect on the costs to the banks of obtaining funds, and therefore enable them to reduce mortgage rates.

As a result of the above, nearly all tracker rates have been withdrawn from the market to be repriced. The next week or so should be interesting as new rates gradually begin to appear again.

But what does this mean to the individual who may be about to remortgage?

Well, two things.

Firstly, the rate that you will revert to when your current deal comes to an end, the lenders Standard Variable Rate(SVR,)will probably be much lower that it would have been a week ago. This may mean that you are beeter off sitting on the SVR with your current lender rather than moving elsewhere or taking another deal with them.

Secondly, we are due to see a lot of new rates coming out which may well be a lot more competitive than you were expecting. So there could be cheaper options out there.

Also, depending on how rates are repriced, it may be a good time to fix your mortgage rate, although this will depend on your circumstances.

If you are due to come out of your current deal any time soon, speak to an independent mortgage broker. They will be able to tell you what the best deals out there are for your circumstances and tell you whether it is worth you moving at all or, as is now often the case, you are better off staying where you are.

I, as a first time buyer, have been offered a morrtgage by a top lender, this was a few days before the rate cuts, I paid £999 fee and now they have told me that if I renegotiate the mortgate I will loose that and have to pay another £999. This sounds a bit shabby to me, what do you think? advice please?

Lots of questions here.

Firstly, who is the lender?

Secondly, did you go to them direct or through a broker?

Thirdly, what was the fee called? ie booking fee? Arrangement fee? Valuation fee? Application fee?. And was it specified in the Key Facts Illustration (KFI) that the fee was non refundable?

Fourth, what kind of product did you have? ie fixed, tracker etc

And finally, why do you want to change it?

It was a leading high street bank, and the fee was called a Product Fee and the mortgage was arranged direct by a financial advisor for the bank involved, and it is a fixed rate mortgage, lastly because the rate has now fallen considerably I wanted to get a better rate for the mortgage, I am being charged 6.25%. Thanks

This is the trouble with dealing with a banks advisor rather than an independent mortgage advisor.

You should have been told that in all probability rates would be coming down considerably and that therefore it was worth jumping on to a tracker asap before they increased their margin on the tracker but that fixed rates aren't the most competitive deals at the moment.

Sorry for writing that as it isn't very helpful for you in your current situation.

As for the £999 fee, I don't think you can get out of it. I'm assuming you have already received a mortgage offer at the original rate, and therefore you will not be able to change it without paying the fee. I can't imagine the bank advisor would misinform you if you could indeed change it.

So the quuestion left for you is, is it worth paying the fee again to obtain the new rate. In order to anwer that I need to know the new rate you could move to, how long it is fixed for and how much you are borrowing.

I'm sure that this isn't the answer you were hoping to hear, and it is frustrating when you feel you have missed out, but that is the nature of fixed rates, you get the security of knowing your rate won't fluctuate, but you miss out on any reductions in rates.