I’ve just got a promotional email from one of the internet banks I bank with and it interestingly had a table showing the drop in Bank of England interest rates over the last year:
Bank of England Base Rates
|10 April 2008
|8 October 2008
|6 November 2008
|4 December 2008
|8 January 2009
|5 February 2009
|5 March 2009
It must be pretty distressing for people living off their savings, as the drop means that their income has dropped drastically. But it is good news for people with mortgages, especially people who are now on negative interest rates. This came about from banks offering mortgages at 0.5%, even 1% below base rate 2 years ago. This made sense back then, but now it technically means that the bank should be paying them for borowwing the money. How crazy is that.
The thing to do here however is to maintain your mortgage payments. Instead of paying off interest you pay more of the capital; with the net result that you shorten the life of your mortgage. Personally, I’ve tried pushing my mortgage payments back up to what they were in the beginning and so far I’ve knocked 5 years off my 25 year mortgage.
Now to go see if I can find myself one of these negative rate mortgages. If you can get one of those mortgages, you might just be able to invest in that super yacht and retire for life.