UK Enjoys Low Loan Rates For Three Years
The Bank of England base rate of interest for savings and loans will now have remained at its historically low level of just 0.5 per cent for a total of three years, following the regular monthly meeting of the Bank’s Monetary Policy Committee (MPC) yesterday.
The announcement was made yesterday and came as no surprise to financial experts, or consumers, who have now come to take their cheap loan rates as a normal state of affairs. In fact, many borrowers with a variable rate home owner loan who have taken out their first loan within the past three years, will not have known anything other than cheap loan rates.
The MPC first lowered interest rates to their current level back in March 2009 and it will have been a total of three years of cheap loan rates by the time the MPC meets again at the beginning of March.
The MPC also took the decision to increase the current level of quantitative easing from the current amount of 275 billion by a further £50 billion, to £325 billion, in a bid to support the UK economy and try and prevent a further recession, although many experts were hoping for £75 billion worth of extra funding.
It is hoped that the additional quantitative easing will allow high street banks to lighten their lending criteria and offer more personal loans at competitive rates, as well as business loans to smaller firms who require additional capital.
David Kern at the British Chamber of Commerce (BCC) said “Although the benefits are not immediately obvious to the business community, quantitative easing plays a key role in strengthening the financial system and stabilising the wider economy.”
“In the face of difficult domestic circumstances and the ongoing crisis in the Eurozone, the decision was a sensible one.”
