Interest rates lowered to 5%
by Kay Murchie
Following the Bank of England’s Monetary Policy Committee (MPC) meeting this morning, the base rate has been cut from 5.25% to 5%, as widely expected by economists.
This is the third time since December that interest rates have been cut in an effort to protect the economy from the global credit crunch.
However, due to the credit crisis, which makes funding mortgages more expensive for banks, lenders may not pass on the full reduction to borrowers.
Mortgage rates for many borrowers have actually increased and the central bank’s credit conditions survey last week warned that the situation could deteriorate.
The six million homeowners who have a tracker mortgage are the most likely to benefit from the interest rate cut as they move in line with the base rate. Those with a £200,000 mortgage will save over £30 a month.
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