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interest rates
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Interest Rates...

This is the section were we talk about interest rates. There ere are many types of interest rates available on the market and also many different ways that interest is charged.

What we have done here in the site is gone into specifics of rates and how they work etc. This information can be accessed via the menu to the left of the page, but that said this page gives you some generic information on how interest rates work, how they are calculated and the various flavours that can be available to borrowers..

All mortgages and loans are charged interest, this is how the lenders make their money. The actual Interest rate charged is the choice of the individual lender though it is generally set by market conditions. Such conditions are known as supply and demand which means how many people want a mortgage and how many lenders there are to fill that demand.

Please note the graph below is not accurate and is for illustrative purposes only.

There is also one other factor that has a bearing on interest rates and that is the Bank of England's base rate. A lot of people are confused why the Bank of England's base rate is not the same as their mortgage. The media gives them the impression that they are one and the same. This is not the case, with the exception of the Tracker mortgage or base rate tracker see menu left for further info. Though mortgage rates do follow the bank of England's base rate changes they are not tied into them in any way. As has been said in the earlier paragraph mortgage rates are set more on the basis of supply and demand. That said the Bank of England Base rate does affect the mortgage lender as it is this rate that more closely reflects the lenders costs in relation

to the money they are lending which is why you will very rarely find a mortgage available for less than the Bank of England Base rate.

The differing types of interest rates available across the industry from different lenders and within their various myriad of products is due mainly to the supply and demand competition issue. Lenders will offer all kinds of rates and schemes to entice clients into their products to enable them to make money. It is for this reason that we have such a wide selection of mortgages available in the market place today.

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