The central bank for the United Kingdom, based in the City of London. The Bank of England is responsible for setting base rates, and is currently governed by Eddie George. One of the first acts of chancellor Gordon Brown after the Labour Government came to power in 1997 was to make the Bank of England independent from the UK government, following the advice of US Chairman of the Federal Reserve, Alan Greenspan.

Bank Of England Base Rate
Prevailing rate of interest set by the Bank of England. This is amended regularly to reflect changes in the economy and forecasts for growth and borrowing.

With changes in the market, for example due to the 2008 credit crunch, the rate changes are an important factor in alleviating the pain of existing borrowers. The Bank of England are aware though that as the cost of borrowing decreases credit card and loan debt increases and that they can fall into the trap of replacing one problem with another.

Britains credit card and loan debt is already at a level that is higher than the majority of Western Countries. People have lived off the plastic and a culture has developed where they have bailed themselves out with borrowed money. If this were to continue with mortgage payment shortfalls funded on credit a deeper and deeper hole will be dug.

Unfortunately, over 2008 this is the only option for many families who have mortgages at levels that do not allow for any upward turn in their mortgage payments. With the lack of mortgage products available those that woul normally remortgage and release some equity are finding they either cannot borrow, or can only do so at an increased price. Some are unable to remortgage altogether.

Experts are unsure how long the current climate will last. Realistic estimates are at least 12 months.