Will Interest Rate Cuts Hit the High Street?
I was wrong. I was convinced the interest rate cut announced by the Bank of England yesterday was not going to make any difference to UK high street interest rates. However there have already been a few mortgage providers reacting to the announcement by reducing their rates too. Of course the new interest rates will only come into effect from January 1st 2008.
If you have a £100,000 mortgage you should see the 0.25 per cent interest rate reduction add an extra £15 to £20 to your pocket every month. If you⠙re on a fixed rate mortgage of course you⠙re tied into the lenders rate for the period of the offer.
Only two UK lenders have actually confirmed theyâ ™re reducing their Standard Variable Rates by 0.25 per cent, keeping their reductions in-line with the base rate reductions. At least this is a good sign; mortgage lenders seem willing to pass on rate reductions to the high street. Itâ ™s also a good sign that maybe things arenâ ™t quite as bad as the media made out when the credit crunch hit Northern Rock Bank. I wouldnâ ™t expect every bank or building society to follow suit but it does indicate that the banks can afford to relax a little.
Hopefully this will bring a more stable economy for the New Year. The Government and Bank of England need to keep a close eye on retail, manufacturing, property and the overall affect these markets have on inflation and consumer confidence.
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