Lloyds CEO warns homeowners “ultra low” rates aren’t coming back

Whilst it is widely expected that UK interest rates will finally be reduced in the coming months, Lloyds Banking Group (LSE:LLOY) chief executive Charlie Nunn is not expecting a return to the “ultra-low” levels seen in recent times.

The new normal for UK mortgages will more likely be between 3% and 4%, Nunn said earlier on Thursday in comments to Sky News.

After a decade where mortgages have been in the 1.5-2.5% range, he noted that the market doesn't expect the Bank Rate to fall below 3.5%.

Nunn reckoned that once the Bank of England cuts interest rates the initial relief will be felt first by government and businesses, as their borrowing costs ease, but for households it may take longer for the benefits “to feed through”.

Meanwhile, with the British election looming, he added that the next UK government will be extremely limited in how much they can invest in the economy, due to increased levels of government debt in recent years.

The government won’t be able to ‘pay its way out of this next stage’, he noted.