Interest rate cut on the cards for UK consumers

A welcome reprieve from the credit crunch may be in store for UK consumers this week, as the Bank of England gears up for a possible interest rate cut on Thursday. City experts, speaking to The Times, predict that the cut could have a negative impact on inflation rates – yet the Bank of England is likely to go ahead with the downward adjustment nonetheless.

The latest rate cut rumblings come amid reports that Abbey National, the UK’s only lender still offering 100 percent home loans, may be withdrawing this product from the market. Such a move is likely to have the greatest impact on first-time homebuyers, who tend to rely on 100 loan-to-value mortgages when financing their first homes. The fate of the UK’s last 100 percent loan will be known later this week.

Experts predict that the Bank of England may reduce interest rates to 5 percent – a quarter of a percentage point cut – at a monthly meeting scheduled for Thursday. Despite the fact that this will be the third cut since December, homeowners have not yet enjoyed any significant benefits from these reductions – primarily because stricter credit control has resulted in lenders withdrawing many of their products from the market.

Global Insight’s chief economist, Howard Archer, told the Times that a rate cut later this week is highly likely – regardless of the pressure this may have on inflation. “We believe that the increased downside risks to growth stemming from tighter credit conditions, coupled with signs that the downturn could be deepening, will lead the MPC to cut rates from 5.25 to 5 percent on Thursday, despite the inflation pressures,” he told the paper.

Rate cuts may save you a few pounds each month – but will this be enough to keep you out of debt? If rising costs and insurmountable mortgage backlogs are breaking your budget, contact MPG Investments for a reliable cash solution. MPG offers cash for houses – so why not contact us for a guaranteed, obligation-free quote for your house today?

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