UK Interest Rates Remain Low

With interest rates still at a historic low in the UK, property is still very much on the agenda for anyone looking to make their money work harder for them. And for borrowers, low mortgage rates combined with the stamp duty holiday make investing in bricks and mortar an increasingly attractive option. 

The Bank of England made two emergency interest rate cuts back at the start of the Corona Virus Pandemic, dropping the base rate to just 0.1% back in March 2020. The historic drop was designed to ease the economic impact of the pandemic and has not yet risen. 

This means that should the Bank of England wish to reduce any further (though there has been no clear indication it should do so), interest rates would go into negative – be at less than 0% – there has been some speculation that this could happen. 

Could UK Interest Rates Go into Negative Figures? 

In August 2020, Bank of England Governor Andrew Bailey said there were not any plans to deploy negative interest rates in the coming months; however, when asked about this year, he told CNBC, “No, I can’t give you that because I would never give you a judgement on what monetary policy is going to be a year ahead before we get there.”

Mr Bailey continued: “What I can tell you is that other analysts are essentially right, in the sense of saying it is in the toolbox.

“But, there is no plan at the moment to bring it out of the toolbox and put it to work.”

However, in February, the Bank of England’s Monetary Policy Committee wrote to banks to tell them to prepare for the possibility of interest rates turning negative and announced that they would hold the base rate at 1%. 

Why choose property

Historically low base rate means that savers are receiving little returns on money in savings accounts. 

Conversely, house prices in the UK hit a record high in 2020, and the latest figures show that values rose 8.5% to an average of £252,000 across the country.

A booming housing market has seen transaction figures double year on year thanks to the introduction of the stamp duty holiday, and Savills are now predicting house price growth of 4% to the end of 2021. 

And it’s not just the UK. 

In our Global markets article, we uncovered robust housing markets across the globe. This provides those in the UK with a wealth of options for investing their money more wisely and provides a varied choice when it comes to choosing entry pricing and location. 

While from a long term perspective, property investment has almost consistently outperformed savings. As the interest rates look set to remain low for a time to come, now is undoubtedly the time to consider how you can make your money work harder for you.


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