It’s official. With the Bank of England Base Rate remaining at its lowest point since 1971, banks and building societies have set their interest rates at their lowest since records began in 2007, despite predictions last year that they would increase at the turn of 2016.
How much have they fallen by?
It’s important to remember that the Bank of England Base Rate, which is the rate that banks and building societies use when calculating their own interest rates, still remains at 0.5%.
However, it is the bank and building society rates that have fallen, with the average one dropping by 0.05% to their lowest ever levels.
Why have they fallen?
In short, uncertainty. The current tumultuous global financial markets and the upcoming EU referendum mean that confidence within the UK has stumbled. To increase rates now would be a dangerous move by the Bank of England as nobody really knows to what extent the result of the referendum will have on the economy.
With the market hesitant, Bank of England governor, Mark Carney, announced a couple of weeks ago that the Bank could actually cut interest rates to zero as it looks to boost to the amount of spending in the UK.
Won’t making interest rates lower cause people to stop spending?
If the Bank and the Monetary Policy Committee do decide to cut rates once again, it should only be a temporary measure whilst the wave of uncertainty disappears.
After the result of the EU referendum has taken its toll and the markets have calmed, it is expected that rates will slowly begin to rise again. The aftermath of the referendum will take a while to take hold so this could be around this time in 2017 that this happens.
Because of this, now could be the time to look at remortgaging or getting on the property ladder before rates do rise.
For further information contact Open House Torbay on 01803 659 000, or visit: openhousetorbay.co.uk
Responsive Video Embed (Fitvids)