The Bank of England's monetary policy committee (MPC) has
chosen to lower interest rates for the remainder of
December, it has emerged.
At its monthly meeting in London today (December 6th), the
MPC voted to reduce the base rate of interest attached to
personal loans, credit cards and other borrowing products
by a quarter percentage point to 5.5 per cent. This is the
first time that the committee has cut rates since July
2005. According to the body, the decision was taken due to
slowing economic growth, deterioration in the wider
financial markets and a tightening in the supply of loans
and other types of credit to both households and
businesses. However, as a result of the announcement, a
number of consumers could find that pressure on their
spending will lessen during the coming months as charges on
borrowing such as personal loans fall.
Meanwhile, the Bank reported that inflation on the consumer
price index stood at 2.1 per cent over the course of
October. It was suggested that increased food and energy
prices are set to keep inflationary levels above target in
the coming months, which in turn could impact upon people's
ability to service other areas of their finances such as
loans, mortgages and credit cards.
Commenting on the MPC decision, Simon Rubinsohn, chief
economist for the Royal Institution of Chartered Surveyors
(Rics), said: "Today's rate cut will provide some much
needed relief for the 1.4 million homeowners who are due to
refinance their mortgages over the next year or so. Higher
money market rates resulting from the credit crunch
threatened to lift the monthly out-goings for many of these
borrowers which in turn could further crimp consumer
spending during the course of 2008."
However, the Rics economist added that although it would be
wrong for homeowners to "ignore the inflation risk", many
people should be able to cope with "the sharp jump in food
and oil prices". Mr Rubinsohn added that the institution
expects the MPC to cut rates again in the early stages of
2008.
Stephen Leonard, director of mortgages for Alliance &
Leicester, added that today's decision "is excellent news"
for all homeowners, especially those who are due to find
their short-term fixed-rate deals are set to expire. As a
result of the move, consumers may find that their ability
to make payments on mortgages, loans and other commitments
is not under as much pressure following the Bank's previous
moves to increase the base rate five times since August
2006.
The director added that such moves could also help
prospective first-time buyers to get on to the property
ladder as mortgages will become more affordable. He said:
"Having enjoyed historically low fixed rates, this move to
reduce the cost of borrowing will be a welcome one."
As a result of today's decrease, now could be an ideal time
for those consumers who are currently struggling to handle
their finances to apply for a loan. In taking out a
personal loan, many people may find that it helps them to
manage their money. According to Lloyds TSB's recent
consumer barometer, a record 73 per cent of Britons believe
that, in general, costs have increased over the last 12
months. Rises in mortgage payments, food prices and utility
bills were reported to have taken place over the course of
this year, with a cheap loan being one possible way to meet
such expenses in the coming months.
----------------------------------------------------
Abbi Rouse writes for All About Loans. Our visitors can
apply online for poor credit secured loans. We also
specialise in cheap loans, and the cheapest consolidation
loans online. Visit today http://www.allaboutloans.co.uk
No comments:
Post a Comment