Big UK rate cut may help holders of investment property loans

photo credit: Wolfiewolf

The Bank of England has slashed interest rates by 1.5 per cent in a move which could increase the availability of investment property loans.

The shock reduction means rates fall to three per cent after the move, which was co-ordinated with other central banks.

Reaction from property companies and associations was almost universally positive, as many had expected a far smaller cut of around half a percentage point.

The Council of Mortgage Lenders (CML) said the move indicated the Bank had “grasped the nettle” in the battle against recession.

CML director general Michael Coogan said:

“What is important is how this feeds through to lenders’ borrowing costs - and lenders will need to balance the interests of savers, as well - but such a sharp downward movement provides more room for lower borrowing costs more quickly.”

Borrowers will now be waiting to see if the cut will be passed on to them after many lenders faced criticism for not passing on past rates.

The Royal Institution of Chartered Surveyors (RICS) also commended what it called a “bold move”.

RICS chief economist Simon Rubinsohn said:

“This reduction in the rates should now enable lenders to pass on a significant amount of the benefit to the high street.”

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