Bank rate cuts 'unpopular'

14/01/2009

The Bank of England's decision to cut interest rates again has proved a flop with the public.

According to a survey from moneysupermarket.com, around 66 per cent of Britons feel "angered" with the reduction, which brought rates to an all-time low of 1.5 per cent.

One of the main reasons the Bank has been cutting rates recently - they were as high as five per cent last October - is that they want mortgage payments to be made cheaper.

The idea is that the Bank reduces the interest rate at which it lends to banks - and these banks then cut the rates they charge for mortgages and other loans to consumers.

However, while lenders have responded by reducing some of their loan rates, savers have also been hammered by cuts.

The fact that many of the Bank's reductions have not been passed on to consumers in full has also sparked anger.

Louise Cuming, head of mortgages at moneysupermarket.com, said: "This could well be the time for the rate cuts to end.

"If lenders show they aren't going to drop rates any further then it is pointless the Bank of England deciding on any further cuts. We need the financial stability that comes from a solid banking sector, but banks are being urged to offer high rates to savers and lower rates for borrowers - the sums just don't add up."

Tags; Housing Debt and Bills, Young Family Finances, Retirement Money Problems, Credit Card Lifestyle, Recent Graduate Debt,

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