2008 could see three interest rate cuts
March 18, 2008
Analysts and economists have predicted that 2008 could see the Bank of England cutting interest rates three times, which will make financial management and affordability easier for homeowner that have had to face five interest rate increases and repayment increases since August 2006. Many had hoped that the Bank of England would cut interest rates after November’s Monetary policy Committee meeting, but the rates stayed at 5.75%, which is the level that the base rate has been at since July of this year.
According to some experts a series of interest rate cuts next year could see the base rate fall to 5% or below. Many are expecting an interest rate cut either in December or at the beginning of 2008, with a further one around June of next year. A third interest rate cut could take place later on in 2008 state economists, and even three quarter point cuts would mean that the rate falls to 5% and repayment on variable rate mortgage will become more affordable.
According to one industry professional: ‘Crucially the Bank has validated market expectations that we are going to see two or three interest cuts in 2008.’ Another said: ‘The report is markedly more doveish and indicates that at least two interest rate cuts are likely.’
It is thought that this will be welcome news not only for homeowner on variable rate mortgages but also for those currently on cheap fixed rate deals that are due to come to an end in the coming months.
Many homeowners have seen hundreds of pounds added to their mortgage repayment as a result of the interest rate rises, and the level of repossessions in the UK has rocketed.
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