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UK Interest Rate: 5.00%
UK
Interest Rates Forecast: Possible cut in mid-late summer
Bank
of England Cuts Interest Rates - But Will It Make Any
Difference?
In
a widely-expected move, the Bank of England's Monetary
Policy Committee cut the Bank Base Rate to 5% at its April
meeting.
While
the cut was welcomed by businesses and banks, there is
considerable doubt over whether it will actually have
any effect on mortgage rates, which are
largely determined by the LIBOR - the interest rate at
which banks and building societies lend to each other.
The
LIBOR (London Interbank Offered Rate) has been considerably
higher than the base rate for some time and remains so.
To
illustrate the scale of the problem, just hours after
the Bank announced it was reducing the base rate to 5%,
four major UK mortgage lenders announced that they were
increasing their mortgage rates.
The
last two weeks have seen a large number of UK lenders
increasing mortgage rates and fees and has also witnessed
some of the most competitive lenders withdrawing from
the mortgage market temporarily, stating that they don't
have the lending capacity to meet demand for their 'best
buy' mortgages.
This
latest bank interest rate cut shouldn't
do any harm - but homeowners should not necessarily expect
to benefit from it, either.
RBOS
Predicts Rate Cut To 4.5% By 2009
One
of the UK's largest banks, the Royal Bank of Scotland,
has forecast that the Bank of England will cut the base
interest rate to 4.5% by 2009, in response
to continuing economic pressures.
RBOS
economist Ross Walker said that following April's cut,
he expects to see a "further quarter-point cut to
follow in the summer" and a final 0.25% cut in the
first quarter of 2009.
The
comments were made in response to a statement by BoE Governor
Mervyn King that there had been a "marked" change
in economic conditions in the UK.
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