Interest Rates Likely to Fall

The news this week from several organisations connected to the finance industry concerned falls in mortgage applications and home prices across most areas of the UK. This confirms that the UK economy next year could be heading towards uncertain times. With inflation now above the target Bank of England rate, interest rate cuts could be on the way.

Although this maybe good news for existing homeowners and those seeking to take out a cheap personal or secured loan, there is fear among some economists that by cutting interest rates which is a tried and tested method of boosting consumer confidence and spending to bolster the economy, this will have no effect this time round.

Why?

As a nation we are now entering un-chartered waters as the level of debt per head of population is the highest it has ever been, therefore, consumers, may not react by increasing their spending in the way the Bank of England and the Government want them to!