The Bank of England (BoE) has released up to £150billion of new lending to businesses and individuals across the UK – which many believe could pave the way for cheaper mortgages and a potential drop in interest rates.
The shake-up comes following the result of the recent European Union (EU) Referendum, which seems to have cast a shadow of uncertainty over Britain’s future.
In a bid to do “whatever it takes” to keep Britain’s economy buoyant, BoE Governer Mark Carney has announced that banks and building societies will be allowed to use part of their so-called ‘capital buffer’ to fund increased lending.
Mr Carney said: “This is a major change. It means that three quarters of UK banks accounting for 90 per cent of the stock of UK lending will immediately – immediately – have greater flexibility to supply credit to UK households and firms.”
The news comes just one week ahead of a potential cut in the BoE’s base rate.
Analysts have predicted that a 0.25 per cent drop is the most likely scenario in the short-term – but some have gone as far to suggest that the BoE’s base rate could be cut to zero by the end of summer 2016.
