The bank rate has a direct impact on the property market and the amount of rent to be paid for its use. After all, it determines the amount of the monthly payment on the loan. It is 3.5% in the UK. However, banks set a higher rate because of the risk of defaulting on the loan. The longer the term of the money used for, the greater the risk of the bank not only failing to collect its income, but even part of the money lent. This is why commercial banks have a higher interest rate than the national bank rate in the UK.
It is possible to buy a flat in Kensington, London, not only for living but also for renting. Many people invest in property and at the same time make money from renting it out, which they use to pay off the loan, all or part of it. This reduces the financial burden on the buyer’s personal income considerably, because the costs of buying housing are thus reduced.
In this way the bank rate affects the amount of the rent. It is therefore cheaper to rent a flat in Kensington if the national bank rate is reduced.
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