Lenders ‘failing to drop interest rates’

Lenders around the UK are failing to drop their interest rates in line with the Bank of England’s base rate, one expert has suggested.

According to Paul Dales, UK economist with Capital Economics, the issue of banking groups and other money lenders not trimming their repayment rates is “continuing problem”.

With millions of British consumers struggling to become debt free, Mr Dales has maintained that the bank’s interest rate decisions are being weakened as a way of influencing the overall economy.

“It’s not that monetary policy is now impotent, it’s just maybe a bit less effective than before,” he said.

“That does support the argument that interest rates might have to go quite far below what people think is a neutral level of around 4.75 to five per cent.”

At the beginning of February, the Credit Action charity reported that the typical British household pays almost £3,800 each year in interest on the personal debts.