Base rate hold is helpful to those in debt

11/12/2009

The Bank of England has announced its decision to hold the base rate at its record low level for the eight month running.

The news was of no surprise to economists, with rates expected to remain depressed for several months in 2010 at the very least.

That, though, will be no consolation to savers, who have had to make do with meagre returns on their savings for several months.

Indeed, new research has found that the amount of competition on the savings market has severely decreased in the last month.

Moneyfacts.co.uk said that 62 per cent of changes to products on its websites were withdrawals – with many of the best deals being taken away.

People struggling with mortgage and unsecured debt repayments will welcome the respite, though, with focus potentially being on reducing mortgage arrears'>mortgage arrears and paying off debts whilst they can.

Debt solution provider, EuroDebt, believes there are several trends going on.

Kevin Still, director of the debt management firm, said that "people who can afford to service debt are trying to use the low interest rates to pay them off.

"Meanwhile those that can't manage are having to use expensive forms of credit to make ends meet, potentially creating a 'debt spiral'."

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