Bank of England cuts interest to 0.1% due to coronavirus pandemic

Bank of England cuts interest to 0.1% due to coronavirus pandemic

The Bank of England makes a second round of cuts to interest rates to protect the UK economy

Brean Horne
Thu, 03/19/2020 – 15:10

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The Bank of England (BoE) has cut the base rate to an all-time low of 0.1%.

It forms part a second wave of emergency measures to limit the economic impact of the coronavirus pandemic.

The Monetary Policy Committee (MPC) voted to cut the rate from 0.25% down to 0.1% in a special meeting which took place today, 19 March 2020. 

As part of the new package of emergency measures, the MPC also unanimously voted to restart its Quantitative Easing project by purchasing an additional £200 billion of UK government and corporate bonds. 

It comes a week after the BoE cut interest rates from 0.75% down to 0.25%. 

How will this affect borrowers?

Cuts to the base rate usually make the cost of borrowing cheaper. 

When the Bank of England made its first cut last week, mortgage providers were quick to pass on the reduction to customers with a tracker or standard variable rate (SVR) mortgage. 

While today’s cut will see rates fall for borrowers with a tracker mortgage, the impact of coronavirus on business workforce may limit the extent to which further reductions can be made. 

Andrew Montlake, managing director of mortgage broker, Coreco says: “With UK interest rates now at their lowest level in history, we expect a surge in enquiries about what this means from existing and prospective mortgage borrowers. 

“Those on a tracker product will see an immediate benefit, but fixed rates are unlikely to be cut much further.   

“Lenders have their own issues to deal with as many of their staff are off or working from home so this is unlikely to translate into cheaper rates across the board. 

“We are already seeing some lenders, especially more specialist mortgage providers, increase their rates to protect their positions. 

“In the current climate, lenders need to preserve their margins more than ever, if not bolster them further. 

“For anyone looking at remortgaging within the next six months, now is categorically the time to get on with it.”

How will this affect savers?

The base rate cut comes as a further blow for savers, who have faced lacklustre interest rates for the last decade.

Current account holders have also seen a significant reduction in interest rates too. 

In January this year, Santander announced it would cut the interest rate on its 123 account from 1.5% to 1% on balances up to £20,000 from 5 May 2020.

A month later TSB revealed that it would cut interest in its Classic Plus account from 3% to 1.5% on balances of up to £1,500 from 2 May 2020.

Most recently, Starling Bank slashed rates on its personal current account down to 0.05%, following the BoE’s first base rate cut on 11 March. 

Interest rates across savings and current accounts are likely to fall further in the coming months. 

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Government to help the vulnerable with energy bills during the coronavirus crisis

Government to help the vulnerable with energy bills during the coronavirus crisis

Customers using pre-payment energy meters are told they won’t lose their supply during the pandemic

Stephen Little
Thu, 03/19/2020 – 12:57

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Vulnerable energy customers who use pay-as-you-go energy meters will not have their supply cut off during the coronavirus crisis, the Government has announced.

The energy industry has agreed new emergency measures with the Government to protect the domestic energy supply of those most in need during the disruption caused by the coronavirus.

From today, over four million customers with pre-payment meters who are unable to add credit can speak to their supplier about options to keep them supplied.

Measures include nominating a third-party for credit top-ups, having a discretionary fund added to their credit, or being sent a pre-loaded top-up card so that their supply is not interrupted.

Disconnection of credit meters will also be completely suspended, while energy customers in financial difficulty will be supported by their supplier. This could include debt repayments and bill payments being reassessed, reduced or paused.

Secretary of State for Business and Energy, Alok Sharma, says: “While friends and family will play a role in helping people impacted by the coronavirus, we recognise there will be many customers who will need additional support and reassurance, particularly those who are financially impacted or in vulnerable circumstances.

“The Government has committed to do whatever it takes to get our nation through the impacts of this coronavirus pandemic. Today those most in need can rest assured that a secure supply of energy will continue to flow into their homes during this difficult time.”

The move comes after discussions between the Government and the energy industry aimed at helping those customers most affected by the coronavirus outbreak.

Experts believe that people working from home during the crisis are likely to see their energy bills soar as they use more heating, electricity and broadband.

Chief executive of Citizens Advice, Gillian Guy, says: “This is an uncertain time for many people. Energy suppliers need to play their part by communicating clearly and supporting their customers as much as possible. Keeping people on supply, making sure they have warm homes and don’t face additional financial or other stresses about their energy supply will be essential.

“Suppliers will need to put in place support measures for people on prepayment meters, people and families who need to self-isolate or take steps to reduce social contact, and people who may otherwise be in vulnerable situations.”

What should you do if you can’t top up your meter?

Customers that are unable to top up their pre-payment meter are advised to contact their supplier immediately to discuss how they can be kept on supply.

Ofgem recommends consumers leave the meter box unlocked if they need someone else to top up the meter.

Smart meter customers should be able to top-up remotely, such as by phone, mobile application or online.

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