The UK has one of the largest amounts of foreign investors around the globe. While many will seek out mortgages in the locations that they plan to purchase property in, others will seek to purchase from the UK lenders. Unfortunately, this may be more costly moving forward.
On Thursday, the Bank of England cut interest rates here. The rate is now set at 5.25 per cent, which is down 0.25 per cent. The key reason for cutting rates is to boost the economy, which is showing signs of slowing. Many hoped for a larger decrease in the rate but the Bank of England did not drop rates nearly as low as the Federal Reserve did. They are concerned about the rising prices that would follow suit.
Nevertheless, this rate cut by the central bank does not offer much hope to investors looking to secure mortgages here. The problem is that many of the top lenders in the UK will be increasing rates nonetheless. Royal Bank of Scotland, Alliance & Leicester as well as many other top banks will be raising the rates they charge customers. The reason behind this is the fear of the credit crunch. Additionally banks are tightening up measures to reduce losses. Even with the substantial cut that the Bank of England made, it is unlikely that this will translate into lower costs for property investors here.
