Bank of England cuts interest rates
On the 4th August, in the face of a potential UK recession fuelled by the uncertainty surrounding Brexit, the Bank of England has decided to cut interest rates from 0.5% to 0.25%.
This move is a record low and the first interest cut since 2009 and it may not stop there, the Bank of England has indicated that interest rates could go even lower if the economy worsens.
In fact, the Bank of England has allocated another £170 billion of monetary stimulus in the UK economy, to help prevent them from slipping into another recession. The Bank of England’s new measures include a £100bn scheme to force banks to pass on the low-interest rate to households and businesses.
The Bank of England’s Governor Mark Carney said that UK banks have “no excuse” not to pass on the lower borrowing costs to customers and will be charged a penalty if they fail to do so.
This move by the Bank of England is a huge advantage for about one in five Britons who have mortgages that are “tracker” mortgages – which is about 1.5 million borrowers. These lucky few can expect to see a decrease in their monthly mortgage repayments.
However, the half of mortgage borrowers on fixed-rate mortgages will not see any immediate benefit at all, in fact with the economy close to another recession things could actually get worse for a majority of UK property owners.
The problem here is that with the UK interest rate being lowered to 0.25% means that savers would receive lower interest rates for some time. This will then mean people are less likely to be able to save for a deposit to buy a house resulting in even fewer buyers in the UK property market.
The property market is already in dire straights so this move by the Bank of England could potentially make the situation worst.
Here at National Homebuyers we are already inundated with sellers trying to sell their homes fast because in a post-Brexit environment their property is not selling. With this in mind, we would recommend that if anyone is wanting a quick house sale then they should get in touch quickly with us because we believe things are just going to get worse.