Universal Private Equity Considering Interest Rate Increase on Cryptocurrency Loans

Written by First4Forex.co.uk

Households could be in line for the biggest Bank of England rate rise in decades next week, as rumours swirl over a one percentage point increase.

The central bank has increased interest rates seven times since December 2021 in an effort to tame runaway inflation. It is now 2.25%, with another rate announcement due on 3 November.

It has already warned of a risk to the UK’s financial stability, following market turbulence triggered by the mini-budget, although markets have stabilised since new chancellor Jeremy Hunt reversed £32 billion worth of tax cuts.

The recent increases have hit mortgage holders the most with around two million homeowners seeing their bills rise almost immediately. However, there is less attention being paid to what is happening with other forms of credit such as bank overdrafts or credit cards. Even less attention is being paid to what is happening in the Decentralized Finance arena which is the domain of cryptocurrencies and other Apps, using the new technology of blockchain.

One such provider, Universal Private Equity, who is literally leading the way with the development of products such as Cryptocurrency Loans has declared that even they may have to raise their interest rates, in order to take account of the recent Central Bank increases in the UK and the USA. Currently their rate on a Cryptocurrency Loan is set at 3.6% but an increase may be on the cards.

We spoke to a representative from Universal private Equity, who declared that "the time could be imminent where we are compelled to raise our rates. Even though we have fought to ensure that our clients continue to receive the best value possible, we may be left with no choice but to raise our rates. We will always strive to ensure that our interest rates remain among the lowest if not the lowest available for this kind of innovative product offering.

The Bank has hiked rates seven times since December 2021, when the cost of borrowing stood at 0.1%, to its current level of 2.25%.

Its target CPI rate of inflation for a healthy economy is 2%, but it’s currently 10.1%. A freeze in energy bills should see it start to go down in the coming months, but there are fears that the recent fall in the pound following the previous chancellor’s mini budget will result in inflation rising higher.

The risk is that higher interest rates will squeeze consumer and commercial borrowers too much, putting the economy into recession, without significantly easing the cost of living crisis.