Thursday, March 5th, 2009
The Bank of England has reduced the base rate to a new all time low of 0.5%. The further drop (from 1% in February) was widely expected.
The Bank has also promised to use £75bn of funds to buy assets from the government and other banks. This will increase the amount of money in circulation, hopefully making lending more easily accessible.
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Thursday, February 5th, 2009
The Bank of England has now cut the base rate to 1%, to bring the rate to a new historic low. This is of little help to mortgage holders though unless they are on variable rate mortgages and the drop is passed on by their lender. It is estimated that around one third of the 12million mortgage holders are on variable rates. It will of course not help the remaining 8m stuck on fixed rate deals.
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Thursday, January 8th, 2009
The Bank of England has announced that this month’s drop in interest rates will be 0.5%. This brings the base rate to 1.5%, which is its lowest level since the Bank of England was formed in 1694.
While a cut would normally be great for mortgage holders, in the current economy, many banks are not passing on the full extent of the rate cuts to borrowers. The best deals are also not available to people who do not have a 25% deposit. The best 75% Loan to Value loan fixed rate mortgage available (Cheltenham & Gloucester) has a rate of 4.29, while the best 90% Loan to Value fixed rate mortgage (Britannia) is 6.09%.
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Thursday, December 4th, 2008
The Bank of England has today voted to cut the base rate by 1 percentage point to 2%. The cut brings the base rate to its lowest level since 1951.
The second hefty cut in a row (following the 1.5% cut in November) was widely expected, with evidence generally pointing to the economic downturn gathering pace.
Response to the move among lenders has been mixed, with the UK’s biggest lender, HBOS, only passing on a quarter of a percent to borrowers on its standard variable rate.
The cut follows news from Halifax that house prices fell 2.6% between October and November – their biggest monthly drop since the early 1990s.
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Thursday, November 6th, 2008
The Bank of England’s decision today, to cut the interest rate by 1.5%, has been surprising to many people even in the current climate. In the largest cut for 27 years, the Bank reduced the rate to 3% – its lowest rate since 1955.
The size of the cut was unexpected by most banks, and they are not yet sure what to do with their mortgage rates. The government however, are pushing mortgage lenders to pass the rate on to borrowers, with the chancellor, Alistair Darling, saying “I think it’s essential that the banks do pass on the benefit of lower interest rates to people.”.
Clearly attempting to address the rapidly developing signs of recession, it is hoped that the cut will help strengthen the property market. With Halifax recently announcing that house prices dropped by 2.2% last month, bringing the average price to £168,176, and that the house price to average earnings ratio has fallen below 5.0 for the first time since February 2004, increased affordability should also help stimulate the market.
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