Bank cuts rates

The Bank of England's Monetary Policy Committee (MPC) has cut the base rate of interest by 0.25 percentage points.

Members of the MPC opted to bring the rate down to 5.25 per cent, its lowest level since January 2007.

The move has been widely welcomed, with many analysts predicting that it will lead to an increase in the number of people looking to buy a property.

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (Rics) is pleased with the reduction but said that more needs to be done.

"The Rics welcomes today's move by the Bank of England although further interest rate cuts may be necessary to offset a continuing tightening in the cost of credit which is hitting household finances," he commented.

"It is significant that December's interest rate cut has had little impact on consumers' wallets. Lending standards are continuing to tighten with both the lowering of loan to value ratios and the changing terms for credit cards adding to the bad news for beleaguered borrowers.

"Whilst a reduction of 32 pounds on a typical mortgage may offer some comfort, should the rate cut be passed on in full, rising costs elsewhere are likely to offset any benefit," added Mr Rubinsohn.

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