UK Bank Base Rate (BBR) Reduced to 1%

[Summit]

The Bank of England has today reduced the Bank Base Rate (BBR) from the previous 1.5% record low to a new record low interest rate of 1% in an attempt to save the UK economy that is now officially in recession.

This marks the fifth interest rate cut since October, as the Bank seeks to encourage more lending.

However, there are concerns that savers will be hurt by lower interest rates.

And business groups argue that this rate reduction will not be enough to ease the economic crisis, and will not encourage banks to lend.

The decision comes after official data showed the UK had entered a recession in December, after two successive quarters of economic contraction.

The Bank Rate has now been reduced from 5% in October last year.

In a statement, the Bank of England said that the rate cuts, along with government measures to boost the economy, “would provide a considerable stimulus to activity as the year progressed.”

Mortgage Cuts

Following the rate cut Paul Broadhead of the Building Societies Association (BSA) told the BBC that savers were being “punished”, arguing that the move could hinder the funds available to societies to lend as mortgages.

Meanwhile, many lenders responded by cutting some of their mortgage rates.

Halifax said it would pass on the rate cut to customers with standard variable rate mortgages.

Other lenders to pass on the rate change to holders of such mortgages include Nationwide, Barclays, Lloyds TSB and Skipton Building Society.

To read more, go to this post on the Summit Finance Blog : UK Bank Base Rate (BBR) Reduced to 1%

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