Base rate could drop to 0.25%
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Kevin Mountford, head of banking at Moneysupermarket.com, says the likelihood of the base rate being cut to 0.25% is greater now than it has ever been.
He told the Daily Express: “The likelihood of a base rate cut is greater now. It will bring benefits to borrowers if passed on.
“At the moment, for families and households under a lot of financial pressure, any savings would bring welcome relief. For people with an average mortgage of £150,000 on a standard deal, they are looking at saving up to £50 every month.
“It could also mean fixed-rate deals will come down as the lending market becomes more competitive.”
However, George Buckley, UK economist at Deutsche Bank, who is also quoted in the article, says although a cut is “technically possible”, it is more likely that the current 0.5% rate will carry on for some time.
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Readers' comments (5)
Matt Sutton | 15 Aug 2011 8:36 pm
Despite the economic pressures I still find this highly unlikely. Inflation is still way over target, and reducing the interest rate further will have minimal benefit and will penalise further the elderley and those with savings.
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Anonymous | 16 Aug 2011 9:58 am
In for a penny as they say. A base rate of 0.5% is no good to anyone, so why not just drop to 0%?! It would have an immediate impact and would cost nothing to implement. Inflation is high because of food and fuel costs, so this would not affect inflation at all. I support a reduction as there is no reason not to!
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bobby | 16 Aug 2011 1:13 pm
I not sure all the pensioners who now have a choice of eat or heat as their savings are producing no interest at all would agree with you that this is no reason not to drop the base rate to 0%.
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Anonymous | 16 Aug 2011 3:49 pm
Interesting point Bobby but if those pensioners have significant savings, they will be fine. If they don't, it really won't effect them anyway. I would suggest that the pensioners who have to chose between heating their homes and eating, don't have any savings at all...
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roger | 17 Aug 2011 10:00 am
An anonymous comment was low base rates are no good for anyone is not entirley correct .For borrowers it meand= sdebt reduction and more money for lenders to recyle back to the economy.the base rate is irrelevant to any lender, what is relevant is the margin over basethat they can charge---their profit. It's much easier and more acceptable to market loans at 5,6,7, % than 15+ % so they have a massive markup on their business 5% or so instead of usual 2/3 .so also borrowers have more money to spend in the economy. we are with low interest rates for good now the lenders love them. Savers can invest in buy to lets they are the future for a renting populace.
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