Bank Home Loan Interest Rates for UK at an All-Time Low Until 2014

Current Bank Home Loan Interest Rates


The country’s bank home loan interest rates are on a record low since 2009. In July of last year the Bank of England had decided to continue keeping the base interest rate to 0.5%. People who aspire to become homeowners should take advantage of this all-time low, especially since the rate is not expected to change until 2014 at the earliest, according to the report from the Daily Express. Indeed there is no better time to go house shopping than now.


While this news is a welcome one for house hunters, it is a disappointing one for those who are counting to earn something from their bank savings. Low base interest rates means their savings will also yield smaller profit from interest.


It seems incredible that the Bank of England continues to stick by this decision even though the economy shrank by 0.2% in the last quarter of 2011 and the inflation rate of the same year is at least twice the Bank’s target of 2%.


If we take a look at the business side of things, it makes perfect sense for the national bank to reduce interest rates since all other private financial firms in the UK had also reduced their own, creating a stiff competition within the money lending industry. In fact the Bank announced its four-year interest reduction a day after Barclays announced that it is offering its cheapest mortgage deals in 15 years. This announcement had signaled the beginning of a price war within the industry.


Vicky Redwood from Capital Economics, a company of economic analysts, also confirmed that the cheap loan interest rates will hold for now. Considering that the current economic situation of the country makes the people repulsive of expensive loans, it is very unlikely that bank home loan interest rates will increase soon.


The Purpose of Reduced Bank Home Loan Interest Rates


The Bank of England has purposefully lowered loan interest rates to encourage the public to borrow money. In an economic crisis, the spending power of the public indeed becomes a casualty; however, the slow economic growth will only grow worse if the public starts to withhold money and refuse to spend it. There needs to be a constant flow of money from consumers to product and service providers (in this case borrowers and banks or other financial institutions) to keep the economic engine running.


The problem is that even though the bank home loan interest rates are currently very low, the spending power of the public is already compromised by the effects of economic recession. Inflation, low pay, expensive energy costs, and threats of unemployment for some makes it difficult for Britons to risk any long-time financial obligation. Only those who have very steady income sources or have untouched savings could truly risk taking out a housing loan.


Still, the opportunity to own a house is still open to Britons, at least until 2014. Choose financial lenders like Circle Loans. It can provide cheap housing loans that can match bank home loan interest rates.