Interest Rates For Loans Kept On Hold
The Bank of England’s Monetary Policy Committee (MPC) has held its usual monthly meeting on Thursday this week and, despite some suggestions from analysts that interest rates on loans and savings might actually fall into negative figures for the first time ever, the decision has been made to keep the rate on hold at 0.5 per cent for another month.
This will now be the seventh month where interest rates have not changed and will come as more good news and in some cases relief, for those borrowers with a tracker or standard variable rate on their homeowner loan. The Bank has also agreed to continue with its programme of quantitative easing, although this will not be extended again, as it was last month.
Although borrowers with an existing loan are benefitting from the reduced interest rate, many experts feel that consumers looking for a new loan are not receiving the advantage of the currently low rates and that banks are taking the opportunity to cash in on low rates by not passing the reductions on to customers. Meanwhile, banks and building societies are continuing to apply large margins to homeowner loan rates and personal loan and credit card rates still seem to be increasing, whilst savings rates remain extremely low.
Michelle Slade of Moneyfacts.co.uk said “Base rate has been at an all time low for six months now, but it appears that only providers are feeling any real benefit. Borrowers looking for a new mortgage deal have been hardest hit, as lenders continue to look to repair their balance sheets through increased margins. All is not lost for borrowers as competition slowly seems to be returning to the mortgage market. The number of mortgages available is slowly increasing and the average arrangement fee charged has decreased.”
