LETTING & ESTATE AGENT

Bank Of England cuts interest rate and punishes savers again

Bank Of England cuts interest rate and punishes savers again
The Bank of England has announced that it has cut interest rates to an all-time low and its first cut in over seven years.

The drop from 0.5% to 0.25% is part of the BOE's package of measures to help the county and the confidence of the money markets since the Brexit vote. The cut, which has been rumoured to be on the cards since the referendum, means that mortgage lenders will be encouraged to pass the saving onto borrowers, reducing mortgage payments and encouraging purchases in the housing market.

The banks have reacted immediately by cutting ISA rates and savings accounts, punishing savers even further. Imagine you had a ISA account and wanted to invest £100,000 today - searching around you might do a little better but basically you would get roughly 1.2%, meaning an income of roughly £1200pa (I know compound interest will vary this slightly so bear with the rough figure). You could take the same £100,000 and buy a 1 bedroom flat and make an annual income of £6000pa - I realise you would have to pay tax of this however this is still a big difference.

UK growth is now forecast to flat-line for the rest of this year, and is forecast to grow by just 0.8pc in 2017, down from its previous forecast of 2.3pc so I cant see that interest rates will go up again any time soon!