A drop in inflation has offered hope to the more than 1 million homeowners on tracker mortgages, with the Bank of England expected to cut its base rate of interest next month.<\/p>\n
Figures published by the Office for National Statistics today showed that inflation was 3 per cent in the year to January, down from 3.4 per cent in December. It\u2019s the lowest level for the consumer prices index measure of inflation since March last year.<\/p>\n
\u2022 UK inflation rate falls to 3 per cent in January<\/a><\/p>\n Financial markets expect the Bank of England to cut the base rate by 0.25 percentage points to 3.5 per cent at its next meeting on March 19. This would give an immediate boost to those with tracker mortgages whose variable interest rates are linked to the base rate. Mortgage brokers said fixed rates would begin to drop too, so homebuyers and the 1.8 million whose fixed mortgage deals are set to end this year could benefit.<\/p>\n A 0.25 percentage point cut you your mortgage interest rate is worth \u00a3250 a year (nearly \u00a321 a month) for every \u00a3100,000 of mortgage debt.<\/p>\n The average balance on a tracker mortgage was \u00a3138,000 in June, according to the trade body UK Finance, with a 5.43 per cent interest rate. A 0.25 percentage point cut would give the average tracker-rate holder about \u00a329 off their monthly bill. For those on standard variable rates, the rate given to borrowers coming off fixed deals, the average mortgage was \u00a366,000 in June, with an interest rate of 6.95 per cent. Those borrowers could be about \u00a314 better off a month.<\/p>\n