Bank interest rate shocker! 34% of Brits thought it would be 5% or more by now, just 12 months ago

09 December 2008 / by Rebecca Sargent
In January 2008, one third of Brits predicted that at the end of this year, the Bank of England base rate would be 5 per cent or more, yet it stands at just 2 per cent!

Following the Bank of England's base interest rate falling to as little as two per cent, Fairinvestment.co.uk research shows that just twelve months ago more than a third of people questioned thought that the base rate would stand at five per cent or above.

The news follows the decline of the UK's economy which has followed on from the credit crunch which began in August 2007. However, the results of a Fairinvestment.co.uk user poll conducted in January 2008 suggest that people did not expect things to get as bad as they currently are.

Commenting, chartered financial planner at Fairinvestment.co.uk, Sharon Bratley said: "The results of the poll back in January just go to show that people really didn't expect such economic turmoil to happen. Interest rates have now been slashed to just two per cent in a desperate attempt to stimulate lending and the economy."

The survey offered the highest potential base rate for users to choose as 5.75 per cent or above and the lowest as 4.5 per cent or lower. Mrs Bratley continued:

"Back in January, the thought of the bank base rate falling much further than 4.5 per cent by now was hard to entertain, which is displayed in the way that our lowest option for users to select was '4.5 per cent or lower'."

At the time of the poll, the base rate stood at 5.5 per cent and had done since December 2007. Previously, however, the interest rate had been at 5.75 per cent since July 2007.

Of those questioned, 29 per cent thought that the interest rate would be 4.75 per cent by now, "this shows that people were expecting a fall, just not to the extent that has obviously become necessary to bolster the economy," Mrs Bratley said.

In addition to that 29 per cent, more than a quarter (27 per cent) correctly forecast that the interest rate would be '4.5 per cent or lower' by now. Although, Mrs Bratley added, "it is unlikely that many would have had the forethought to think that they would be as low as two per cent."

However, as many as 10 per cent of people questioned in January thought that the Bank interest rate would be 5.75 per cent or above by now, "the fact that so many people thought the interest rate would be that high shows what little grasp we had of things to come. Since then the mortgage market has constricted, forcing the value of property down, and jobs and the retail industry are in real danger.

"Unless the Bank interest rate is passed on to consumers and businesses, it is a pointless exercise, let's just hope that lenders realise this sooner rather than later," Mrs Bratley concluded.

User poll conducted in January 2008 on Fairinvestment.co.uk with 170 respondents