The Chancellor, George Osborne, has recently announced plans to make the housing market more competitive, and the banking system easier to manoeuvre. At the launch of the Organisation for Economic Co-operation and Development’s (OECD) report on the state of the UK economy, the Chancellor called for the Bank of England to loosen its money lending criteria. It is hoped that this will encourage lenders to offer lower interest rates, thus creating economic growth through increased lending.
In addition, in the days prior to this, Osborne promised plans to make switching banks easier. Banks may offer better rates of interest to attract and keep customers, thus encouraging competition between banks. He hopes that by September 2013, it will take just 7 days to transfer to another bank. Similarly, the intention is that these changes to the existing machine will ‘build a banking system that works for us all.’ As part of this makeover, the Chancellor said that he wants ‘upstart challengers offering new and better services that shake up the established players.’
Both announcements could impact bank account interest rates, as well as mortgage interest rates; through the introduction of new, better deals for the housing market. The effect of this may be that there are more mortgage applications. This should improve lending figures and hopefully boost the economy.