A period in which the Bank of England base rate remained low would be “great” for borrowers, it has been stated.
Lloyds TSB Corporate Markets chief economist Trevor Williams explained that if interest rates continue to fall – as they have been doing since the autumn of last year – holders of loans or mortgages may benefit from lower repayments.
Borrowers could save money on outstanding debts as well as any new debts they may take out, he said, something that could aid people in working towards becoming debt free.
He remarked: “It would be great from a consumer spending perspective if the cost of paying for a loan gets as low as it possibly can.”
However, Mr Williams noted that a low base rate may discourage people to save, but added that it increases the public’s incentive to spend, which “can help to create conditions that could eventually lead to recovery”.
The Bank of England’s monetary policy committee this month decided to lower the base rate to one per cent.
By Jamie Price