He says: “It may encourage more new business or re-broking from people who believe equity release rates have reached rock bottom so now is a good time to take out a lifetime mortgage at a fixed rate or switch to a more competitive rate.”
For Ian Lowes, managing director at Lowes Financial Management, it is evident that savers are not going to get back money on their savings with this adjustment.
“Unless interest rates rise dramatically or inflation falls, this situation will continue to the extent that perception of taking no risk at all by leaving money in the bank could be one of the biggest risks an individual can take.”
Hargreaves' Coles says it is difficult to know how effective rates will be in controlling inflation, especially given so much of the inflation rate is being driven by global oil and gas prices.
She says: “With inflation set to hit 7.25 per cent in April, the BoE could not just sit on its hands and hope for the best.”
Coles describes the central bank’s effect of making it more expensive to borrow and spend, which comes as a horrible blow for borrowers who now have to add bigger interest charges to an “already toxic mixture”.
Ruth Gillbe is a freelance journalist
