UK gets much awaited fall in interest rates
December 14, 2007
After months of waiting and struggling, UK homeowners finally got the news that they had been hoping for earlier this week, when the Bank of England announced that the base interest rate in the UK was to be cut.
Although the fall is only by 0.25%, taking the base rate from 5.75% to 5.5%, for many this signifies the start of a series of interest rate cuts, which means that the impact on homeowners could be vastly reduced.
Many experts are predicting that the interest rate will fall by another quarter or half point next year with another one or two interest rate cuts, which would prove additional welcome news to struggling homeowners.
Since the series of interest rate hikes, many homeowners have seen their repayments rocket, and have struggled to meet repayments each month. Repossession levels have been rising, and there has been much concern expressed over the 1.4 million homeowners that are due to come off cheap fixed rates over the next year, as they could face repayments that soar by hundreds of pounds a month, which many will be unable to cope with. However, experts state that the drop in interest rates should help to ease the situation somewhat.
Industry professional have also expressed relief over the cut in interest rates. One official from the British Chambers of Commerce stated: “A cut in rates was clearly needed to counter the growing international threats emanating from the US, and to unblock the dangerous obstacles preventing the banking system from operating smoothly.”
An economist from EEF added: “Though manufacturing remains in good health a number of warning lights for the economy are now flashing amber. This is a sensible pre-emptive move which will reassure business that the bank is on the case and help to cushion the economy from the worst effects of instability in the financial markets.”
Alan Wright
14th December 2007
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