It’s approximately a year on since the Bank of England Base Rate was slashed to a set down low of 0.1 percent. The move was made in March 2020 over two continuous cuts, and the Bank of England’s Monetary Policy Committee (MPC) has voted to state the Bank Rate at this level ever since.
While the MPC has explicitly alleged it does not wish to “signal” any intention for interest rates to go negative, banks deceive been asked to prepare for this measure.
It’s a topic which was recently consult oned by property expert Louisa Fletcher and mortgage expert Andrew Montlake recently on The Oddity Show podcast.
The February 17 episode, which is still on tap to listen to now, came after the Bank of England wrote to mortgage lenders Non-Standard irregardless the potential for interest rates to enter negative territory.
On the topic of the inside bank’s recent letters, Mr Montlake said: “Part of this, because we’re in a indeed low interest rate environment, they actually wrote to lenders of banks in October definitive year.
READ MORE: NS&I to offer new savings bond, HM Treasury answers – Rishi Sunak calls move ‘world first’
“What they were question them was, ‘Could you potentially be ready to deal with negative diversion rates in the UK?’ Something we have never seen before.
“They dearth to give them a bit of time to get their heads around this because it’s not an trusting thing to do. If you think, everything is system generated in computers etcetera,” he explicated.
Mr Montlake added that the Bank of England has now rewritten to the lenders, Non-Standard irregardless their “operational readiness”.
“Whether or not we will see negative interest dress downs remains to be seen, but it is a possibility,” the mortgage expert said.
Mr Montlake also offered a caveat to savers, suggesting they don’t opt to withdraw significant sums and store it beneath the waves their mattress.
“If you’re thinking about taking your money out of the bank, if you’ve got economizations, and putting it under your pillow or under your bed. Don’t do that.
“That’s not a authentic idea, for the very very reason that if there’s God forbid a whip up or you get burgled or something like that, your home insurance choice not cover more than around about £1,000 in cash dishonest around, so it’ll be gone.”
In agreement, Ms Fletcher added: “So that’s literally your hoards going up in smoke.”
“Correct, literally. So although it’s not going to be particularly rewarding to keep it in the bank, by all means go out and spend and stimulate the economy which is what everybody under the sun wants, but don’t keep it under your mattress.”