Nice Loans.co.uk > News > Rates Cuts

Good for Loans Customers

Loans customers would have welcomed the recent cuts in interest rates, especially as there is talk for further cuts to come later in the year. But another group of finance customers, those with savings accounts, are not so fortunate.

Economists had predicted that additional cuts could be on the cards that would see rates fall from today's 5.25% right down to 4.5% which would have trimmed earnings for savers quite significantly, but with worries about higher inflation now looming, some are saying that those predicted rate cuts would be harder to come by.

Customers lucky enough to have variable rate loans will now benfit from cheaper repayments on the back of the February reduction.

The Bank of England is charged with keeping UK inflation around the Government's target level of 2%, but it now expects that to rise to 3% by the middle of the year, largely due to higher energy and food prices which have gone up by 15% over the past year.

But if those rises are one-off occurences and are not expected to re-occur, then we should see inflation reducing in the latter half of the year and if growth has not picked up again by then, the next round of interest rate cuts could be rolled out. Mortgage costs, as well as loan loan costs, will reduce, leaving more cash in people's pockets to keep retailers happy and sustain the growth levels we have come to expect over the past few years.

One category of industry expecting to do well despite these changes are the exporters who are set to benefit from a weaker pound, which has fallen by around 6% against other currencies, making UK-produced goods cheaper abroad.

<<< Return to news page | Request a cheap loan quote >>>