Low interest rates and reduced mortgage payments have resulted in a quarter of homeowners in the UK being some ?200 a month better off than a year ago, according to recent Bank of England data.
A survey of 2,000 households revealed that nearly half of mortgage holders have seen a reduction in their monthly payments of more than ?100 in the last 12 months, and a quarter have seen a ?200 fall, Telegraph.co.uk reported. In its quarterly bulletin the Bank of England said that there had been an average fall of ?130 in mortgage payments, and felt that this had had a cushioning effect against the worst of the recession.
At the same time, many pay freezes and fewer wage rises, together with the low inflation rate have kept unemployment above the worst forecasts.
Nevertheless, the Bank also pointed out that many investors were concerned about the risks of inflation and the security of Government borrowing. Investors, the Bank said, were looking for inflation-proof investments as they were concerned about the effects of the ?200 billion quantitative easing strategy over the longer term.
Although quantitative easing has assisted bank lending and helped produce record profits for the Bank, investors are worried about what will happen when it comes to an end.
The Bank did recognise the damage caused by the recession to many families, with more than 25 per cent of families with a non-manual worker suffering lower income after tax, national insurance, mortgages, council tax and loan repayments had been taken into account. Similarly, both families with manual workers and half the unemployed had seen a drop in their income in the past year.
