The Bank of England has announced that the base rate is being lowered to one per cent.
Following its monthly meeting, the Bank’s monetary policy committee voted for a 0.5 per cent reduction in interest rates, something that could offer borrowers debt help in the form of lower repayments.
The Bank stated that the economy is “in the throes of a severe and synchronised downturn”, noting that the supply of credit to businesses and consumers is “constrained”.
Falling inflation and weak spending were cited by the organisation as reasons for the base rate cut.
Council of Mortgage Lenders director general Michael Coogan said that those on tracker loans will welcome the decision, but added that it may not help to boost new lending.
However, he commented: “If the rate cut helps businesses and therefore helps to keep people employed, this will at least help to cushion the impact of the recession on the housing and mortgage markets.”
By Jamie Price