Base rate falls to 5%
As a result of yesterdays MPC meeting, as expected, the BOE has confirmed a quarter percent reduction in interest, bringing national rates down to 5% flat.
With widespread uncertainty shrouding the financial markets at the current time, and with countless numbers of British homeowners fearful towards the future of their financial health, many consumers will be glad to hear the news.
However some sceptical economists are unsure as to how much of a positive effect the change will have.
One expert stated that taking the current condition of the financial markets into consideration, but more specifically the effect that the credit crunch is likely to have on home loan borrowers in coming months, a quarter of a percentage reduction is unlikely to significantly bolster confidence. The other factor which borrowers should be aware of is that a rate reduction of any kind will not have an instant effect, and will therefore make little difference to consumers in the short term, with respect to planning budgets.
Since the back end of 2007 interest rates have reduced by three quarters of a percent, however, it is unclear as to what effect (if any) this has had on Britain’s financially challenged families.
