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News: Interest Rates Cut to Just 2%

Thu, 04 Dec 08

The Bank of England has cut the base rate to 2%, the lowest level since 1951.

This latest 1% cut has come as economic conditions worsen and in an attempt to encourage spending.

The decision is the latest in a spate of dramatic cuts that have seen interest rates tumble markedly in recent months.

Borrowers on tracker mortgage deals will benefit, but a question mark remains as to whether lenders will pass on the cut in full on their standard variable rate deals and new products.

The Council of Mortgage Lenders welcomed this latest cut, but acknowledged in a statement that some lenders may not pass on the decrease as “for the specialist non-deposit taker lenders funding remains both expensive and scarce.”

CML director general Michael Coogan added: “Not all lenders are the same. It is not realistic to expect them all to react in the same way to the rate cut, although where they believe they can cut mortgage rates, they will.”

Sterling fell to a new low against the Euro on news of the cut.


By Joe Lepper

See also: Mortgage Best Buys, House Prices and Trends

 

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