Emergency interest rate cut to lowest level in history
The Bank of England has announced a further emergency interest rate cut, reducing the rate from 0.25% to 0.1% – their lowest level in history.
Andrew Bailey took over the role of Bank of England governor on Monday and this dramatic announcement comes just a week after the interest rate was cut from 0.75% to 0.25%. The Bank also announced that it would increase its holdings of UK government and corporate bonds by £200billion to inject more money into the UK economy.
It is hoped that the interest rates cut will help both businesses and individuals to cope with the economic challenges being posed by the coronavirus pandemic, but the Bank hinted that it would need to do more and that “a further package of measures was warranted”. It described the effect on the economy as a “shock that could be sharp and large, but should be temporary”.
The further cut will be potentially good news for Mortgage borrowers who have also been offered some comfort in the form of an optional 3-month payment holiday, which is essentially a break from paying your mortgage without it affecting your credit rating. Lenders have issued their guidance on how to apply for a mortgage payment holiday but they largely involve establishing that your finances have been affected by the coronavirus pandemic and that you are were otherwise up to date with your mortgage payments.