‘Triple whammy’ of measures from Bank of England boss amid interest rates cuts

BANK of England boss Mark Carney has admitted that the UK won't be hit too hard by a Brexit recession as interest rates were cut to a new low.

He unveiled a "triple whammy" of measures amid predictions of an economic slowdown.

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Interest rates are now 0.25 per cent - this is good for people borrowing but less positive for people trying to save.

Chancellor Philip Hammond said the UK was well-placed to make a success of Brexit as he welcomed the measures. He said: “We enter this period of adjustment from a position of economic strength.”

WHAT DOES THIS MEAN FOR ME?

Anyone with savings or loans, in particular a mortgage, will be affected. But you will not see huge differences. Firstly, because the change is so small. Secondly, because banks were certain it was coming and many have already adjusted savings and lending rates.

I’M TRYING TO SAVE. WHAT  HAPPENS NOW?

Even before yesterday’s announcement, banks had given notice that rates would be cut on nearly 120 savings accounts before the end of the year. Even more will be cut now. Charlotte Nelson of said: “While providers do not have to pass any cut to the base rate on to customers, the likelihood is that they will use this as an excuse to cut rates yet again.”

I’M ABOUT TO RETIRE. HOW WILL IT AFFECT ME?

Those looking to convert their pension pot into a monthly income at retirement are likely to get less than ever. Richard Eagling, head of pensions at Moneyfacts, said: “It’s likely to add extra downward pressure on annuity rates at a time when they’re already at record lows.” Those relying on savings for income will also suffer.

HOW CAN I MAKE MY SAVINGS WORK HARDER?

If you want certainty consider a fixed-rate bond, Moneyfacts says. These pay a set interest rate for a set time. But you cannot access your money early without a penalty. Consider putting your cash in current accounts not savings as some, such as TSB, pay up to 5 per cent interest. Experts  advise paying off  credit cards and loans as the cost of borrowing is “almost certainly” higher than returns on savings. Those saving for  first homes should consider Help To Buy Isas.

WILL NEW MORTGAGE DEALS GET EVEN CHEAPER?

Mortgage rates have already hit record lows, thanks to  price wars between lenders. There is the potential for rates to edge down but many banks have  accounted for the cuts in current deals.

WHAT IMPACT WILL THE CUT HAVE ON THE HOUSING MARKET?

If you don’t have a deposit you will find saving more difficult because interest rates are so low. Cutting interest rates further is likely to improve confidence among  house-buyers.

WHAT WILL HAPPEN TO MY MORTGAGE PAYMENTS?

It depends on what type of deal you have. Some mortgages are directly linked to the base rate, others not.