Mortgage Soup – Bank of England Cuts Rates to 4.25%
Two members of the committee argued for a more aggressive 50 basis point cut, while two others wanted to hold the rate at 4.5%. The majority agreed that falling inflation, a softening labour market, and weak GDP growth justified a modest reduction.
But Luther Yeates, Head of Mortgages at Orton Financial, says the move won’t provide meaningful relief for most borrowers: “For many borrowers, it won’t feel like much has changed. When it comes down to it, rates are still high, and that’s keeping borrowing costs up.
“Understandably, many high net worth individuals are looking beyond the UK as they feel the economy is losing momentum and no longer working in their favour.
“Persistently high interest rates, uncertainty around future cuts, and a lack of bold action from the Bank of England all add to that feeling. A bigger rate cut may help restore confidence, encourage investment, and support a stronger recovery.
“The Bank is meant to be leading the economy, not trailing behind it like an anchor.”
“In commercial lending, which tends to follow the base rate more closely, businesses are still finding it difficult to borrow. This is leading to weaker wage growth and fewer new jobs. These all feed into bleak economic forecasts for the UK, as the high interest rates are reflective of the ‘risk’ of recession and economic downturn.
“Right now, the Bank looks like it’s following the economy rather than leading it. It’s meant to be leading the economy, not trailing behind it like an anchor. The European Central Bank has been more decisive, and the UK should do the same.”
You can read the full article here.
Yeates shared a similar sentiment with Mortgage Introducer: “Inflation is expected to rise temporarily due to increasing utility prices.
“I would love to understand how maintaining a high base rate is supposed to reduce these supply-side inflationary pressures. Two members voted to hold rates at 4.50%. At what point should the Bank consider exercising its powers to remove MPC members who fail to fulfil their responsibilities?”
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