Experts react to Bank of England stimulus package

Experts from various sectors in Britain cast their own verdicts on the Monetary Policy Committee's latest economic strategy.

Bank of Engand
As global markets weighed up the implications of the Bank of England rate cut and new quantitative easing programme in the wake of the EU referendum, experts cast their verdicts on the Monetary Policy Committee's latest economic strategy. Here we look at some of the reactions.

Property Market

Ben Madden, managing director of London estate agents Thorgills – "The first rate cut for seven years can only be a positive for the UK property market. For many homeowners, their mortgage costs have just fallen even further. The property market has by no means imploded since the vote to leave the EU but the decision to cut rates further, and also print more money, should inject additional confidence into UK bricks and mortar."“Alongside the underlying supply crisis, this could see house prices hold firm for the foreseeable future, particularly in areas outside prime central London. Long-term low interest rates have undoubtedly boosted demand in the property market, putting upward pressure on house prices. This new rate cut almost certainly won't send prices up, but it could certainly help to stabilise them. Sadly, while homeowners and many in the property market will benefit, the Bank of England's decision will hit savers hard once again."Jonathan Hopper, managing director of the buying agents Garrington Property Finders – "While this is obviously welcome news for the housing market, it’s also worrying – how bad does the Bank of England think things will get? The rate cut should act to spur demand. With softening prices, increasing flexibility from sellers, and historically low mortgage rates, we’re firmly into a buyer’s market. The mortgage business is hardly brisk at the moment, so lenders may well seek to grab customers from each other by launching new products and offers as a result of the cut. In the context of the housing market, today’s interest rate decision is in reality just a sticking plaster which fails to solve a deeper underlying issue. With property transaction volumes all but drying up, what’s urgently required is direct government action to reduce the costs of moving."“For many homeowners in London and the South East especially, the call on cash to fund skyrocketing stamp duty costs has become an insurmountable barrier, blocking their progress up the housing ladder. Post-Brexit, what the market really needs is a balanced stimulus package to get Britain moving, without further increasing house prices. The Chancellor and governor of the Bank of England are unlikely to find better ways to boost the wider UK economy.”

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Charlotte Nelson, finance expert at – “Borrowers have already been enjoying some of the lowest rates on record and the 0.25 per cent cut to the Bank of England base rate will provide further impetus to the rate-cutting trend. Thanks to government lending initiatives and falling SWAP rates, lenders are very keen to attract new customers and retain existing business, which is why the average two-year fixed rate mortgage has fallen from 4.79% in March 2009 to 2.48 per cent today.""This cut in base rate will also be a significant boon to those currently sitting on their Standard Variable Rate (SVR). Based on the average SVR of 4.80 per cent, today’s cut represents a drop of £28.64 to monthly repayments. However, with fixed rate mortgages still currently sitting at record low rates, borrowers may still be better off looking elsewhere and fixing to a new deal.”


Frazer Fearnhead, CEO of The House Crowd – “Interest rates are at their lowest for 300 years, and banks are offering little or negative interest on peoples’ savings. However, savers do have other options for their hard-earned cash. Newer investment models like crowdfunding can offer stronger returns - the traditional model of relying on banks to offer a decent interest on savings seems to be becoming a thing of the past.”

Commercial Finance

Adam Tyler, chief executive of the National Association of Commercial Finance Brokers – “The decision to cut rates and print more money is a pre-emptive strike by Threadneedle Street. The Bank of England clearly wants to get ahead of the economic curve rather than risk falling behind it. The rate cut is as much about boosting consumer and business sentiment as it is hard, real-world economic impact. After all, a quarter point cut can only achieve so much."“We’re still in the dark about the true economic impact of Brexit but by cutting rates the Bank is sending a message to the markets that it is proactive and prepared to act. It’s simply not going to roll over. Since the vote to leave the EU, we have not noticed a material change in demand from businesses to borrow or banks and other providers to lend. Among the SME community, it has been more or less business as usual. The predicted corporate paralysis simply hasn’t happened. The UK’s businesses haven’t gone into their shells in the way many predicted but have been both resilient and pragmatic. What they certainly haven’t done is panic.”

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