Bank of England’s Interest Rate Cut Could Be Good News for Scottish Borrowers
August 4, 2016
The Bank of England has announced its first reduction in the base rate of interest since early 2009 in response to significant weakening of the UK economy.
Having been a 0.5 per cent for more than seven years, the Bank has decided to take action and reduce its base rate to 0.25 per cent in the hope of adding some stimulus to the national economy.
The Bank’s base rate is a key factor determining the cost of borrowing throughout the country and, while the change has been prompted by fears about the state of the British economy, it could be good news for millions of consumers.
Mortgage borrowers in particular might have cause to welcome the Bank’s decision, with interest rates on thousands of mortgages set to come down in the coming days as a direct result of the change.
There are understood to be between 1.5 million and 1.8 million UK households who have tracker mortgages in place, which are designed specifically to adjust in line with the Bank of England’s base rate of interest.
So for tracker mortgage holders the news of a reduction is certainly positive in the short term and anyone with a variable-rate mortgage could also be in line for a reduction in their monthly outgoings.
All of which could help to ease some of the financial burdens currently being shouldered by many thousands of indebted Scots.
Although, the Council of Mortgage Lenders (CML) has been quick to respond to the Bank of England’s announcement and point out that the change doesn’t immediately mean that all mortgage rates throughout the UK will be reduced.
Approximately half of all mortgage borrowers in Britain are entered into fixed-rate mortgage deals, which means that any benefits they might see as a result of the reduction in the base rate will only be a prospect once their existing fixed-rate deals come to an end.
The Bank of England’s decision-making Monetary Policy Committee (MPC) took the base rate of interest down from 1 per cent to 0.5 per cent in March 2009 and then kept it entirely unchanged thereafter until this month.
“We took these steps [to reduce the base rate] because the economic outlook has changed markedly,” explained Mark Carney, the Bank’s governor in a statement.
“By acting early and comprehensively, the MPC can reduce uncertainty, bolster confidence, blunt the slowdown, and support the necessary adjustments in the UK economy.”
If you live in Scotland and are struggling to cope with your debts then Scotland Debt Solutions can help. Contact us to arrange a free and confidential consultation.
The start of a new year is the perfect time to take stock of your finances and put plans in place for a financially savvy year ahead. While you may feel your problems are insurmountable, there are always things you can do to help, most of them surprisingly easy. Here are 7 ways you can […]
If you have credit card debt which is attracting a high level of interest, moving this balance onto a lower interest card could save you a considerable amount of money. This process is known as a ‘balance transfer’, and if done correctly, this process could save you money and also reduce the time it takes […]
Many thousands of young Brits are being actively encouraged towards taking on debt and spending borrowed money even before they reach their 18th birthdays. That’s according to the price comparison website comparethemarket.com, whose research suggests that roughly one in four 16 and 17 year olds in the UK have been offered credit cards or asked […]
If you’re in serious debt with no hope of repaying your unsecured creditors, you don’t have to wait for a creditor to take legal action against you. You may be able to take matters into your own hands and apply for sequestration (bankruptcy in Scotland). This also prevents your situation from worsening. There are two […]
If you’re looking to save some money it’s a good idea to make a detailed budget that lets you see where your cash is currently being spent, and offers an overall view of your finances. You’ll need to collect together your income and expenditure details, including annual costs such as insurance, car expenses, birthdays and […]
Scotland has a number of formal debt solutions that can help you deal with a difficult financial situation. It’s advisable to take action as soon as possible, however, to prevent your levels of debt escalating when interest and other charges are added. Obtaining professional advice is key in this respect. An approved money advisor or […]