House Price Spy Blog

In my short absence The Bank of England has cut the borrowing rate to a new historic low of just 0.5%. To put this in perspective the rate in October was 5%.

While no-one will be complaining about saving a few pennies (apart from those on fixed rates…who will be putting their finger in their ears and praying the rate goes back up asap) is this really the way forward for the mortgage lending sector? When you penalise the industry they will automatically charge their customers more which will defeat the purpose. Mortgage holders are also savers, consumers and voters…

Apart from the fact that everyone will be saving their money (with hopeless interest rates) rather than rushing out and spending it ‘cos its free money!’, the medium term health of this industry is going to be in putting money into the finance sector and regulating it like never before.

This is only a temporary measure, what happens when the recession deepens in 6 months time and lenders HAVE to raise the rate to keep going? How are people going to react to that? Thats when you get a proper 1970s recession with mass unemployment, riots, tax exiles and rising crime.

When is the general Election Gordon? it would be incredibly cynical to push the UK into an recession just to keep some hope of another term in Government.

The BOE and the government will both say that the BOE has the final say in mortgage rates but look what a mess the economy is in after just few years of their control! The FSA has promised to get their act together and the BOE should do the same. Lowering the mortgage rate is fine but the long term plan should be for more than ‘boom and bust’, quick fix measures! As a homeowner you know there is nothing for free, you would just like leadership rather than tuck shop politics…

The Bank Of England has announced that the mortgage rate has just been reduced by 0.5% to 1%. The major lenders have pledged to pass this saving on as much as possible.

This is the lowest it has ever been, giving every mortgage holder a real boost in the cold weather. Can this level be sustainable? Only time will tell.

This does not give lender much profit to play with, maybe the BOE thought that lenders were putting their shareholders first previously and want to give some cash to the general populace. As mentioned, hopefully this money will not be found at savers expense or at the expense of new mortgage borrowers.

In an even more surprising move than last month the Bank Of England have cut the mortgage rate again to 2% which is the lowest level since 1951. This follows on from last months 1.5% cut.

Many people (me included) are enjoying the lowering in their mortgage payments with almost half being cut from payments in recent month.

The government and BOE had to been seen to do something, and this will ease the hardships that borrowers have experienced. The Bank Of England have indicated that further action will need to be taken, with possible further cuts to come plus investment in mortgage and commercial debt to free up the borrowing system.

Expect more changes in the months to come, the crisis is expected to extend well into 2010.

The Bank Of England has held the mortgage lending rate for June 2008 at 5%, holding for a second successive month. The BOE has slowely decreased the rate from a peak of 5.75% in August 2007.

Whether this will increase consumer confidence enough to breath life into the UK property market will remain to be seen…although the rate can be reduced as much as they want if no-one is buying property and lenders are not giving any decent mortgages out then things will never change.

As always the Bank Of England site has all sorts of facts and figures which are interesting and informative, plus you can get the latest mortgage, inflation and other announcements hot of the presses!

The next rate announcement will be given on the 10th of July 2008.

The bank of England has left the mortgage rate unchanged for May 2008 at 5% as expected in many quarters. This is the second hold in 3 months with the trend reduction – hold -reduction – hold.

Many people expect a drop next month to combat a slow in growth in the UK economy, with 3 cuts in the rate in recent months it is fair to expect another one in June. With the US facing a full-on recession the UK legislation makers will want do everything they can to avoid joining them….

Get the announcement for June 2008 direct from the source on 5th June 2008 from the Bank Of England