BoE cuts rates to 4.5 per cent

BOE CUTS RATES TO 4.5 PER CENT

Article date: 04/08/2005 : 14:47:08

The Bank of England has cut interest rates to 4.5 per cent, a fall of a quarter point.

This is the first time since July 2003 that the Monetary Policy Committee has decided to drop the rate, in a move that will be welcomed by mortgage, loan and credit holders.

Commenting on the rate drop, head of intermediary mortgages at Alliance & Leicester, Mehrdad Yousefi, said: "It is also an ideal opportunity to look for excellent value fixed rate products especially for those on a tight budget."

While some providers have already dropped their variable mortgage rates it seems that the change may not affect fixed rate deals in the same way.

Chris Parrish, Yorkshire Building Society's group treasurer, commented: "The MPC's decision to reduce the base rate by 0.25 per cent was widely expected but may not result in lower short term fixed rate mortgage rates."

The change is expected to give a shot in the arm to the stuttering housing market and has, in general, been welcomed by lenders and borrowers.

How the rate cut will sit alongside the government's attempts to encourage people to save though is less clear.


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