With the International Monetary Fund (IMF) recommending the Bank of England should consider cutting base rate further, MoneySupermarket.com asked site users whether they thought it was a good idea, and found three in five (60 per cent) are against a cut to the base rate.
When asked about the impact a cut could have on their finances, 45 per cent say it would impact their savings with rates already at a very low level following a stagnant 0.5 per cent base rate over the last three years. In addition, 15 per cent of respondents are against a cut because inflation still needs to be controlled.
However, on the other hand, 35 per cent say cutting the base rate would be a good move; 15 per cent of those polled hope it would result in a decrease to their mortgage payments, and a fifth (19 per cent) support a cut to base rate believing it will help stimulate growth in the UK.
Kevin Mountford, head of banking at MoneySupermarket.com said: “It’s no surprise savers have come out fighting against the proposed rate cut as they have suffered from low rates since base rate fell to a record low in March 2009, especially those who relied on the savings interest to provide a regular income. The majority of borrowers on the other hand have benefitted from the low interest rate environment which has resulted in many people having lower monthly mortgage payments. A base rate cut would not be good for banks as it could make it more difficult for them to be flexible on pricing, and as we have seen more recently on mortgages, it could give them the perfect opportunity to decouple rates from Bank of England base rate altogether.
“Although savings rates may appear low, it is still worth taking advantage of the best deals on the market, and with the recent fall in inflation, this should really help to encourage people to start saving again, where they can. There are a number of savings accounts which now beat inflation and consumers need to make sure they are on the best deals possible to maximise their returns. The top paying savings accounts currently offer rates over six times that of base rate so by choosing these, you can reduce the impact inflation has on your pot. Even putting aside £10 a week could make all the difference to your emergency saving funds – vitally important should your circumstances change, for example, if you lose your job.
“Whatever your financial situation, there are some small steps that can be taken to ensure you are maximising your income. Reviewing all of your household bills and not paying over the odds for things like energy, car insurance and day-to-day expenses can save more than you expect.”
