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December 2008

The Bank of England has cut interest rates by one percentage point, from 3% to 2%, the lowest level since 1951. The move, which followed the 1.5% cut in November, has been welcomed by many who said the cut should help the slowing economy. Prime Minister Gordon Brown urged lenders to pass on the cut to homeowners and small businesses, however so far only a handful of lenders have passed on the full 1% cut, with Halifax in particular only reducing its standard variable rate by 0.25%.

Nationwide have announced that house prices are down 13.9% in the year to November. Halifax figures suggest that house prices are now 14.9% lower than last year. One positive note is that Nationwide’s figures indicate that the rate that house prices are falling has slowed which could signal the end of the crash.

Lloyds TSB have announced that it will keep the Halifax and Bank of Scotland brands after it completes its merger with HBOS. Bank of Scotland will be the primary brand used in Scotland, while Halifax will operate alongside the Lloyds TSB brand in England and Wales. Lloyds Banking Group will have the largest branch network in Britain. No decision will be taken about the closure of branches before the deal is completed, which Lloyds TSB expects to happen on 19 January.

Nationwide’s Consumer Confidence Index for November shows that out of the 1,000 consumers polled, 45% think the economy will be worse in six months time, compared to 38% in October. Some 49% of respondents believe there are fewer jobs available now, up from 41% last month. But the majority think they will be unaffected, with 65% saying their household income will remain the same in six months time. Consumers are also beginning to feel slightly more positive about house prices over the next six months. Consumers now expect prices to fall by 5.4%, compared to 5.6% in October.

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