Borrowers boosted as Bank cuts base rate

The Bank of England's Monetary Policy Committee (MPC) has cut the base rate of interest for the first time in over two years.

A cut of 0.25 per cent was announced today (December 6th), with fears over a slowing economy being cited as the main reason behind the move.

It takes the base rate back down to the 5.5 per cent level last seen in May 2007 and will be a welcome boost to mortgage borrowers and potential homebuyers.

"This is just what the market needed. There has been considerable doom and gloom lately as we have had to endure the fallout from some significant national and international events. This latest rate decrease will at least go some way towards repairing the damage done," said Peter Bolton-King, chief executive of the National Association of Estate Agents.

"I'm hopeful this will be the turning point in consumer confidence that will set the market back on track again.

"The rate drop will be especially good news for those who are coming off fixed-rate mortgages shortly. Similarly, first-time buyers will benefit as the lower rates help to reduce the burden of costs currently carried by those purchasing their first home," he continued.

Five increases between August 2006 and July 2007 took the base rate to a six-year high of 5.75 per cent.

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