Interest rate cut of 0.25%

Expectations of an interest rate cut had risen in recent days amid signs that the economy is slowing.  The rate cut was greeted with widespread support across the property market, with the expectation of more interest rate cuts to follow.  Commenting on this, Simon Rubinsohn from the Royal Institute of Chartered Surveyors says:  “We expect the Bank to follow up today’s cut with a further reduction early in the new year.”

It was thought that mortgage lenders might not pass on the reduction to borrowers; however Halifax and Nationwide immediately cut their rates in line with the move, which will encourage the other lenders to do so.

Speaking on behalf of the Council of Mortgage Lenders, Director General Michael Coogan says:  “A reduction in interest rates is exactly what the market needs and will benefit consumers.  This will reduce the risk of payment shock for the 1.4 million borrowers coming off fixed rates in the next year.”