Under George Osborne, borrowing costs have fallen to record lows – as data released by the Bank of England today shows. And this, rather than pretending that he has been helping savers, should be his line of attack – after all, when borrowing costs are down so is the interest savers can earn.
The effect Osborne's cheap money has had on borrowing costs really is quite extraordinary. The average rate on a 2-year 75 per cent LTV fixed mortgage is at a record low of 2.01 per cent, down from 2.6 per cent last summer. That is a significant saving for those signing the contract on their house today. Just look at the graph above to see how rates have plummeted.
Personal loans are also becoming far cheaper too. The cost of a £10k personal loan down stands at a record low of 4.79 per cent. This is Citi's conclusion on banks feeding the urge to splurge:
‘The drop in mortgage rates is likely to give further stimulus to the housing market, and indeed the net balance of people who intend to buy (or build) a house in the next 12 months rose sharply in January to the highest level since 2003. For the corporate sector as a whole, the benefits of low longterm rates probably outweigh the negatives.’