6 Dec

Interest rates cut to 5.5%

Interest rates cut to 5.5%

The Bank of England's monetary policy committee (mpc) has cut interest rates by 0.25 per cent, handing a fillip to struggling homeowners.

This brings the rate down from 5.75 per cent to 5.5 per cent and comes amid mounting pressure from consumers, analysts and economists alike.

The cut is the first since August 2005, and has been interpreted as the bank acting to arrest the current economic slowdown.

Nici Audhlam, head of mortgages at Abbey, welcomed the cut on the grounds that it will bring respite to existing property owners as well as assisting first time buyers.

He said: "The Bank of England's decision to cut the base rate reflects some warning signs of a slowing economy, and in particular the drop in activity that we have seen in the housing market in recent weeks.

"The rate cut will be a welcome start to 2008, providing relief for house buyers and re-mortgagers as it eases the pressure on monthly mortgage payments. For those trying to get onto the property ladder, the prospect of buying a first home at last looks a little more affordable."

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