Kevin Mountford, Co-founder of financial savings group Raisin Uk explains what the impact of the recent decision by the Bank of England to freeze rates, will mean for savers and borrowers and indeed the wider economy.
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00:00 I think there's still nervousness around inflation and we saw the Fed in the US earlier this
00:08 week keeping interest rates at the same level. So that, you know, it is critical that the
00:13 government or the Bank of England gets the inflation rate to 2%. Now there's optimism
00:20 that that is achievable.
00:21 Just a few days ago, the Bank of England made the decision to hold interest rates at 5.25%
00:29 level the fifth time in a row, with assurances from the organisation that they will go lower
00:35 later in the year.
00:37 What it means in reality is that there is an expectation in the market that interest
00:43 rates will start to drop this year. I still think there's mixed opinions, but I think
00:49 that there is a political will, as much as anything else, for it to happen maybe by the
00:55 summer. That then makes people feel a bit more confident and I think it boosts optimism
01:02 within the business sector, so employment and all of that.
01:06 Many people with a mortgage across our region and indeed the whole UK will be impacted by
01:11 continuing higher rates. Those higher payments mean less to spend and support the economy
01:17 elsewhere. For savers though, it's better news after years of lean returns.
01:23 I think there's something like a million customers who are on fixed rate mortgages that are due
01:27 to mature over the coming months. So those individuals are going to keep a really close
01:34 eye on the situation.
01:35 I think from a saver's point of view, and I saw some research, 80% of savings products
01:41 are paying over inflation. So that puts a bit more money back in the saver's pocket
01:48 in real terms. And again, going back to Amelia's point, with salary increases, etc, that's
01:54 why there's a nervousness. A bit more money in the pocket might mean we spend a bit more.