Costs to fall for UK property investment loan borrowers

November 11, 2008 by OPPE News

Some of the UK’s biggest providers of property investment loans are starting to pass on a 1.5 per cent interest rate cut announced by the Bank of England.

Banks had come under intense political pressure after the Bank reduced the base rate by 1.5 per cent last Thursday.

Lenders initially appeared reluctant to react but the likes of Nationwide and Halifax have announced they will be reducing rates on mortgages.

RBS and Natwest are also cutting rates, as is the nationalised Northern Rock. Lloyds TSB and Abbey were the first to announce reductions on Thursday.

Last week’s cut took the base rate down to three per cent – the lowest it has been since 1995.

While many experts welcomed the reduction, research shows consumers expect further action from the Bank of England.

David Kuo, head of personal finance at Fool.co.uk, said:

“The central bank must be seen to be fulfilling the expectations of consumers.

“This is vital if interest rate cuts are to provide consumers with instant gratification.”

A survey by the website showed on average UK consumers expect interest rates to fall to 2.85 per cent.

Four out of five people said they hope rates will fall below three per cent and one in three also expect rates to drop below two per cent.