How significant is this long period of low base rates? This is a question I ask myself, but more importantly and can how long can it continue? For when it does change it will affect most property investors who have mortgages. Now the Bank Rate has remained at 0.5% for 67 months now and this got me thinking when was the last time it remained low for a lengthy period of time? After some research this I what turned up… thank goodness for Google!!! The base Rate has now been unchanged for the longest period since the Second World War. On the 30th June 1932 the base rate fell to 2% and stayed at that level during the great depression and remain so till 24th august 1939. This was a few days before the outbreak of WWII and then it was lifted to 4%. Two months later is was to drop back to 2% again and remained at this level for 12 years until 8 November 1951, 12 YEARS!!! This time it will possibly break the 6-year time frame So the question is when it does rise how will it affect the economy? The thing is… we as ‘a nation’ have become addicted to low cost of credit. When the withdrawal of low rates hits us in the UK it might be a bit of a shock. You see it’s a long time since we have had a rate rise; the last was 5th July 2007 to 5.75% when the economy was at its strongest. And this brings me to my concern, when rates start to climb will they be at 0.25% increments or could they be lower, at say 0.1% increments. I would recommend the later as can you imagine the headlines, rates increase by 50%, you know what our media are like. It remains to be seen.
Posted on: Sat, 01 Nov 2014 17:54:23 +0000
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