Building Societies Association Says “Please Don’t Cut Interest Rates Again”
Thursday this week will see the Bank of England’s Monetary Policy Committee (MPC) meet once again for its usual monthly meeting, during which they will make the decision on what level the base rate of interest on loans and savings should be set at for the following month.
Over the course of the past few months, we have seen the interest rate slashed in order to try and help struggling homeowners and businesses keep up with the repayments on their homeowner loans and business loans during the current economic slowdown.
In anticipation of an announcement later this week, the Building Societies Association (BSA) has warned that a further cut in interest rates would not be in the best interests of the UK economy and would actually be bad news for everyone concerned.
The obvious losers are savers, who have already seen the interest on their money reduce drastically and for many individuals, particularly retired people, this can mean a loss of their only income source. But a further cut would also be bad news for those people looking for a new loan, whether this is a secured loan, such as a mortgage, or an unsecured loan, as this would restrict lenders’ ability to offer loans even further due to a lack of income from savings money, as many individuals look for alternative homes for their money to obtain a better return.
Adrian Coles of the BSA said “If the Bank of England wishes to make a contribution to a recovery in the housing and mortgage markets, it should not cut interest rates this month. We need to encourage an increase in the flow of funds into the mortgage market, not take steps that would further restrict flow. The bank should also bear in mind the severe difficulties suffered by many pensioners who now find that a lifetime of savings has not delivered the standard of living they had every right to expect until a few months ago.”
