Cost of Borrowing could Reduce

Thursday April 10th will see the Bank of England gather and discuss whether interest rates should fall from 5.25% to 5.0%.

Will it happen? Difficult to say. A slight majority of experts feel there will be a cut in rates but there are growing concerns about inflation levels in the UK so it is a difficult one to call.

Will the cost of borrowing fall? Some feel it will, but a drop in interest rates does not neccessarily mean that lenders reduce their cost of borrowing to customers. Some question why the cost is not passed on. The financial industry has taken a massive hit recently with the well advertised "credit crunch" and they may feel that the cut in rates will simply aid them in borrowing from banking institutions at a reduced rate - and that will be enough. Therefore, lenders may notice a cut in interest rates a little bit more than the consumer if they drop to 5.0% on Thursday April 10th.