Rate cut on the cards

Thursday, March 27, 2008

An interest rate cut is on the cards to help out homeowners who are finding things more and more difficult with the rising energy bills, higher petrol prices and lack of available mortgages.

The threat of inflation is still an issue and is in danger of hitting the 3% limit imposed by the treasury but the global credit crisis is more pressing and a rate cut is still possible.

If inflation exceeds the 3% target the governor of the Bank of England is forced to write a letter to the chancellor with an explanation.

In this circumstance the Bank of England's Monetary Policy Committee (MPC) would raise interest rates to stave off inflation pressures.

Instead the MPC may take the unusual step and lower rates due to the turmoil in the global economy and also the threat of recession in the UK.

A cut in interest rates will be a welcome reprieve for most homeowners who have found recent months increasingly difficult to cope with financially as economic conditions have deteriorated.

If you have any questions on this article or others like it, please feel free to contact Solution Mortgages on 0845 123 1260 or visit us online at www.solution-mortgages.co.uk