uSwitch.com comments on today's decision by the Bank of England

Mike Naylor, personal finance expert at uSwitch.com, comments on today's decision by the Bank of England to decrease the base rate by 0.25%

Mike Naylor, personal finance expert at uSwitch.com, comments on today's decision by the Bank of England to decrease the base rate by 0.25%".

Today's decision to move the base rate back to where it was in January 2006 (5.25%) is only good news for consumers if banks do the right thing and pass it on.

Even so, it could still be too little too late for some.

People are currently paying out 35%[1] of their monthly take home pay on mortgage repayments and ten million[2] consumers already feel that their current level of overall debt is unmanageable.

"This second reduction in just three months is by no means a quick fix solution for a complex economic problem.

The last twelve months have been tough for consumers and, as a result of unmanageable debt, at the end of last year 5.4 million[3] people missed payments on debts and bills.

In the previous six months, one in ten[4] had a direct debit, cheque or payment bounced by their bank as they have not have enough money in their account.

More worryingly, 9%[5] of people are currently trapped in a vicious circle where they may need to get further into debt to meet existing financial obligations and 5.8 million[6] may need credit just to help meet their living costs." Naylor concludes: "On an average mortgage, consumers on a tracker deal will be just under £50[7] a month better off following the two base rate decreases.

In the grand scheme of things this may not seem like a lot, but for those that are struggling financially this could be the difference between keeping afloat or going under." The research: The research was conducted online by YouGov Plc for uSwitch.com between 9-12 November, 2007, with a sample size of 2,066 UK adults.

The figures have been weighted and are representative of all UK adults (aged 18+).

All analysis conducted by uSwitch.com and based on 45 million adults in the UK (ONS).

1.

According to the research the average net monthly income is £1467, the average amount paid out each month on debt repayments (excluding mortgage repayments) is £267 and the average monthly mortgage payment is £515.

2.

According to the research, 23% (of 45 million adults = 10,350,000 people) describe their current level of borrowing as just about manageable (18%), no longer manageable (4%) or that they have resorted to an IVA (Individual Voluntary Arrangement - 1%).

3.

According to the research, 12% (of 45 million adults = 5,400,000) admit to having missed repayments within the last 6 months: 7% on credit cards, 2% on unsecured personal loans, 1% on a mortgage and 2% on store cards.

4.

According to the research, 10% of people have had payments bounced at least once in the last six months due to insufficient funds in their bank account.

5.

According to the research, when asked whether they agreed or disagreed with the statement that in the next 6 months they will need to get further into debt to meet existing financial obligations, 7% of consumers tend to agree and 2% strongly agree.

6.

According to the research, when asked whether they agreed or disagreed with the statement that in the next 6 months debt will have to fund their living costs, 10% tend to agree and 3% strongly agreed.

7.

Based on the average mortgage of £150,000 over 25 years: Repayments based on 5.25% APR = £898.

Repayments based on 5.75% APR = £943.

£43 difference.

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