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Low rates for secured loans needed

Low rates for secured loans needed

Category: Loans

Updated: 05/01/2009
First Published: 29/12/2008

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Lower interest rates are needed to boost the economy, an expert has argued.

Jonathan Loynes, chief European economist at Capital Economics, stated that the Bank of England needs to reduce the base rate in order to make secured and unsecured loans more readily available.

He explained that credit is needed in order to stimulate the economy and prevent the likely recession from worsening even further.

The possibility that this would create similar problems in the future is not a priority, he added, stating: "It is a bit premature to worry that you are going to blow up another credit or asset bubble with very low interest rates; at the moment we should just concentrate on avoiding depression."

At its December meeting, the Bank's monetary policy committee unanimously supported a cut in the base rate to two per cent.

However, Mr Loynes argued that this should fall to one per cent or 0.5 per cent in order to stimulate lending.

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