Here We Go Again! Base Rate Drops to 2.0%!
The Bank of England has done it again. Following on the .5% drop in October and the 1.5% drop in November, they have decreased the rate again by 1%. This is great news for borrowers but not the best for savers…
Borrowers with tracker or variable rate mortgages will probably see their monthly payments decrease to some degree. Savers and pensioners on the other hand, will be feeling a pinch as they rely on savings interest for income.
The Fool.co.uk has posted a very comprehensive article on the advantages and disadvantages of this historic change.
But I guess the question on everyone’s mind is, will it drop further? This drop is a clear sign that the Monetary Policy Committee believe that in order to stave off a long recession, drastic measures must be taken. If the economic conditions continue to decline, they will go further. However, this will mean the Pound will lose more value and could possibly result in an inflation rise. It seems the unprecedented 1.5 % drop in November wasn’t a drastic enough move, will this further decrease do the job? Watch this space…
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