How Would Lower UK Interest Rates Affect My Investment with Acorn Property Invest?
In the UK, inflation is decreasing, prompting predictions of earlier interest rate reductions.. But when could this happen and how would interest rate cuts affect me as a property investor with Acorn?
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What’s happening with the UK’s inflation rate and potential interest rate reduction?
There’s been much speculation about interest rates falling within the UK due to inflation continuing on its downward trend and the Governor of the Bank of England has predicted a further significant decrease after it dropped to its lowest level since September 2021.
His positive outlook is likely to heighten speculation that the UK might lead the United States in reducing interest rates from the current 5.25 per cent at an earlier date. Inflation in the UK is now below that of the US for the first time since 2022.
The BoE’s target is to keep inflation at 2% and even though it’s currently sitting at 3.20%, it’s showing a positive decline due to a slower increase in food prices and lower energy bills as well as the higher interest rates we’ve all seen since the end of 2021.
Roger Barker, Director of Policy at the Institute of Directors, remarked that ‘the latest data provides concrete evidence that the inflationary battle is now well and truly under control, and provides justification for an early cut to interest rates.
When will UK interest rates go down?
The MPC convenes eight times a year to deliberate on whether to increase, decrease, or maintain interest rates. Its most recent meeting was on 21 March 2024, where it chose to keep the interest rates steady at 5.25% for the fifth consecutive time. The forthcoming meeting to discuss interest rates is scheduled for 9 May 2024 however many economists are forecasting a rate cut in early summer.
Governor Andrew Bailey recently stated that he had observed "encouraging signs" that inflation was decreasing. "We're not yet at the stage where we can reduce interest rates, but things are progressing in the right direction," he added.
What will an interest rate fall mean for my investment with Acorn Property Invest?
Should the Bank of England decide to lower their interest rates this year, it is highly probable that we will likely follow suit. Acorn Property Invest offers a range of investment products with attractive fixed rates and whilst rates on existing products would remain at their fixed rate, any new products issued would reflect the new lower rates.
What are future rates offered by Acorn likely to be compared to todays?
Whilst no one has a crystal ball, it is likely we would reduce rates on future products in line with the BoE reductions. Below are some examples of our earlier 1, 3 & 5 year rates in a much lower interest rate environment:
Product | Previous Rate | Current Rate |
---|---|---|
3 year income | 7.5% | 12% |
3 year growth | 9% | 14% |
5 year income | 8.5% | 13% |
How can I invest with Acorn?
If you are a certified investor interested in investing with Acorn, please register on our platform to discover the various property development investment opportunities we have available.
*All statements regarding future performance are presented as estimates and not guarantees.
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