Following December’s cut, the Bank of England’s Monetary Policy Committee has chosen to keep the base rate of interest at 5.5%.
With poor retail sales figures emerging from Christmas and concern about the property market many economists have predicted a possible recession in 2008. This has added pressure to the Committee to reduce the rates and stimulate spending, by easing the strain on consumers with debts such as mortgages.
What does the 5.5% decision mean for you?
Borrowing remains expensive, savers cash in
By maintaining the rate the Committee hopes to ward off inflationary pressure on the economy, but essentially this means that for most of borrowing money will continue to be expensive on everything from personal loans to mortgages.
At the start of 2004 when the base rate was 3.75%, a competitive loan of £10,000 over four years might come with an APR as low as 5%, but today a typical APR, on a competitive deal, will be more in the region of 7.1%, making monthly repayments significantly more expensive. If you are looking to borrow money, all this means is that it’s important to search the market to ensure you get the best deal on your loan.
If you’re a saver however then today’s news will be welcomed. The high interest rate means that savings and even some current accounts will continue to offer a fantastic return on any money you put into them.
Savings rates can vary dramatically but if you cash in on one of the better deals you’ll be able to earn anything between six and ten per cent on your money. Like loans and mortgages however it pays to shop around to find the kinds of account which serves your needs.
Click here to compare savings deals
Keeps tabs on your finances
Whatever your financial situation it pays to stay informed about your finances and the products available to you. Worryingly MoneyExpert’s research has found that 6.9 million household bills have gone unpaid since June last year by people struggling to meet their financial commitments, but if you plan and keep a careful eye on your money situation then 2008 could prove to be lucrative year for you.