The Bank of England’s Monetary Policy Committee (MPC) has cut the Bank Rate to 0.1% in an attempt to deal with the Covid-19 crisis.
At its special meeting on 19 March, the MPC judged that a further package of measures was warranted to meet its statutory objectives. It therefore voted unanimously to increase the Bank of England’s holdings of UK government bonds and sterling non-financial investment-grade corporate bonds by £200 billion to a total of £645 billion, financed by the issuance of central bank reserves, and to reduce Bank Rate by 15 basis points to 0.1%.
The Committee also voted unanimously that the Bank of England should enlarge the TFSME scheme, financed by the issuance of central bank reserves.
In a statement, the Bank said: “The spread of Covid-19 and the measures being taken to contain the virus will result in an economic shock that could be sharp and large, but should be temporary. The role of the Bank of England is to help to meet the needs of UK businesses and households in dealing with the associated economic disruption.”
It is the second rate cut the Bank has made this month; on 11 March, the Bank Rate was reduced 0.25%.
Richard Hayes, CEO and co-founder of Mojo Mortgages, said: “Looking specifically on how this further base rate cut will affect mortgages and lenders, we believe this cut needed to happen in order to increase the margin lenders currently operate within.
“Whilst we don’t expect this cut to be filtered down into a consumer’s current mortgage product, April is set to be the second biggest month for mortgage maturities this year, and despite the pandemic, there will be £21bn of loans maturing and therefore a lot of people will need to remortgage.
“As an online broker, we can help consumers remortgage and get the best rate available for them as we are whole of market – all online and over the phone. And despite the uncertainty in these unprecedented times, those who haven’t managed to sort out their remortgage already in time for April should really look to do it now. Rates are at a historical low, and if it could mean saving hundreds on your current mortgage deal, then it’s a no brainer.”