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Base rate cut of 0.25%
The Bank of England announced this week that the base rate has been cut by 0.25% taking the interest rate from 5.25% down to 5%. The move had been widely expected by many industry experts as a result of the flagging economy and the effects of the credit crunch.
Experts are now speculating over future rate cuts, with one economist stating: “We forecast the next 25 basis point cut to 4.75% to occur in June or July and anticipate that interest rates will fall to 4.25% by the end of 2008 and to 4.00% in the first quarter of 2009.”
Size of Rock to be cut by Sandler
Ron Sandler, the government appointed Chief Executive of Northern Rock, which recently passed into public ownership, has stated that he plans to halve the operations of the bank within the next few years.
The bank currently has assets of around £107 million but by 2011 Sandler wants to cut this by more than fifty percent, to £50 million.
The downscale of the bank has also resulted in Northern Rock officials directing customers to rival banks to get remortgages, as well as taking a wide range of products off the shelves.
Millions could be in negative equity by next year
Reports relating to predicted movement for house prices in the UK are making for gloomy reading, with some experts predicting that house prices could fall by ten or even twenty percent over the next couple of years.
According to a recent report millions of homeowners across the UK could find themselves in negative equity by next year if house prices do fall as predicted, which means that they will owe more on their property than the property is worth.
No mortgage access for customers that are not with First Direct
Yet another bank has announced that it is restricting it’s lending for mortgages, stating that those that are not customers with the bank will not be able to access its mortgages.
First Direct, the Internet branch of HSBC, has closed its doors to new borrowers who are not already with the bank.
One official from the Internet bank said: "We’ve seen unprecedented demand for our mortgages since January thanks to our highly competitive pricing and the decision of other lenders to raise rates. As a result, we’re currently seeing applications running at five times our normal volumes."
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