Property News > Dramatic Bank Rate Cut

Dramatic Bank Rate Cut

As anticipated, the Bank of England's Monetary Policy Committee (MCP) has cut interest rates today. What was not anticipated, however, is the size of that cut. Half of one per cent was expected, maybe one per cent if the bank was feeling brave, but very few foretold the massive one and a half per cent that the MPC obviously feels is required if it is to have any effect on inflation and the threat of recession.This brings bank rates to 3.5% and is a move that has been welcomed by the CBI but how will it affect those with mortgages, credit card debt or other loans?  One of the areas where bank rates affect most of us is the impact they have on our mortgages. Indications are that there will be a downward movement in mortgage interest rates but so far the lenders are 'unsure' as to how much of this cut will be passed on to borrowers. The value of property has dropped sharply over the past year and those who have borrowed against the value of their home might be feeling the pinch. Similarly, those who bought property recently could be facing the fact that their home has decreased in value.The credit agency Experian quoted some astounding figures in August this year, in which they said that  many middle class areas have household debt of more than £53,000, not including mortgages. Spending in good times when property values are high and jobs are secure is one thing; paying it back in less prosperous circumstances is quite another, even if the interest rate has dropped.The question on everyone's lips is whether this huge bank rate cut will boost the ailing property market. First time buyers ought to be encouraged but whilst mortgages are scarce and nervousness over long term values remains, the jury is out as to whether it will be enough to stage a revival. Mortgage interest reductions will help some households manage their finances, but set against this are Christmas shopping costs, a huge level of individual debt and dramatic increases in fuel bills, the effect of which is likely to hit in the first quarter of next year.   Families in financial crisis will need to look hard at their Christmas budget and think of ways in which they can either cut their expenditure or boost their income. Second jobs, renting out a room in the house, selling unwanted items on the internet - these are all ways of making a bit of extra cash to help out over the Christmas season. But in cases where financial problems are serious these initiatives alone are unlikely to be enough.Facing debt is difficult, lonely and stressful. There are agencies that help people in this financial crisis, such as the Citizens Advice Bureau and the government's national debt line. If you want to sell your home to raise cash or to avoid repossession, you may be thinking a sale will be impossible in the current climate. That's where Property Rescue can help. They guarantee to give you a valuation for your home which, if you accept it, will lead to a fast, secure sale. Give Property Rescue a call for more details. You can speak to one of their experienced advisers in complete confidence and entirely without obligation.As anticipated, the Bank of England's Monetary Policy Committee (MCP) has cut interest rates today. What was not anticipated, however, is the size of that cut. Half of one per cent was expected, maybe one per cent if the bank was feeling brave, but very few foretold the massive one and a half per cent that the MPC obviously feels is required if it is to have any effect on inflation and the threat of recession.This brings bank rates to 3.5% and is a move that has been welcomed by the CBI but how will it affect those with mortgages, credit card debt or other loans?One of the areas where bank rates affect most of us is the impact they have on our mortgages. Indications are that there will be a downward movement in mortgage interest rates but so far the lenders are 'unsure' as to how much of this cut will be passed on to borrowers. The value of property has dropped sharply over the past year and those who have borrowed against the value of their home might be feeling the pinch. Similarly, those who bought property recently could be facing the fact that their home has decreased in value.The credit agency Experian quoted some astounding figures in August this year, in which they said that  many middle class areas have household debt of more than £53,000, not including mortgages. Spending in good times when property values are high and jobs are secure is one thing; paying it back in less prosperous circumstances is quite another, even if the interest rate has dropped.The question on everyone's lips is whether this huge bank rate cut will boost the ailing property market. First time buyers ought to be encouraged but whilst mortgages are scarce and nervousness over long term values remains, the jury is out as to whether it will be enough to stage a revival. Mortgage interest reductions will help some households manage their finances, but set against this are Christmas shopping costs, a huge level of individual debt and dramatic increases in fuel bills, the effect of which is likely to hit in the first quarter of next year.Families in financial crisis will need to look hard at their Christmas budget and think of ways in which they can either cut their expenditure or boost their income. Second jobs, renting out a room in the house, selling unwanted items on the internet - these are all ways of making a bit of extra cash to help out over the Christmas season. But in cases where financial problems are serious these initiatives alone are unlikely to be enough.Facing debt is difficult, lonely and stressful. There are agencies that help people in this financial crisis, such as the Citizens Advice Bureau and the government's national debt line. If you want to sell your home to raise cash or to avoid repossession, you may be thinking a sale will be impossible in the current climate. That's where Property Rescue can help. They guarantee to give you a valuation for your home which, if you accept it, will lead to a fast, secure sale.Give Property Rescue a call for more details. You can speak to one of their experienced advisers in complete confidence and entirely without obligation.

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