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.
Your personal credit score plays an important part in securing new loans and credit, and can affect your financial life for better or worse. Lenders use the information in your credit file to determine whether you present a high risk of default, and if your credit score is low, you may find it difficult to […]
Credit unions offer a range of financial products including current accounts, savings accounts, and loans, and can be a good alternative to banks and building societies whilst also helping your cash flow. There are credit unions all around the UK, almost 100 of them operating in Scotland. They’re not always widely advertised, however, and although […]
It’s a worrying situation when you realise your outgoings exceed your income, and it can be difficult to prevent debt in this situation, but there are solid steps you can take to get back on track – you just need to act quickly. Increasing your income or reducing the money going out are essentially what […]
If you’ve lost your job, state benefits and tax credits can provide vital financial support to see you through this tough time and help you avoid taking on too much debt while you look for more work. As far as your old employment is concerned, it’s important that you check your final wage slip to […]
If you are a Scottish resident in financial difficulty, you may have entered into a Trust Deed in order to restructure debt repayments to creditors. A Trust Deed is a fixed voluntary agreement made between the debtor and creditor, with the help of a trustee. Debt is broken down into smaller, affordable instalments, typically lasting […]
A Debt Arrangement Scheme (DAS) is a government backed scheme which allows you to repay debt through contractual, monthly instalments without the threat of legal action and incurring penalties or interest. The scheme was established in 2004 for Scottish residents in debt, providing an alternative solution to sequestration, the Scottish equivalent of bankruptcy. A Debt […]