Bank of England cuts rate by one percent
- 00:01:40
- ITN
Bank of England cuts rate by one percent
The Bank of England has slashed interest rates to 2 per cent, the lowest level for decades. The full 1 per cent cut came despite last week's Pre-Budget Report stimulus package as the economy slides into a deep recession. The Bank's Monetary Policy Committee (MPC) announced its decision after two days of deliberations amid worsening economic news. Last month, the MPC surprised markets by slashing the base rate by 1.5 per cent to 3 per cent, the biggest for more than 27 years. The dramatic percentage point cut takes the cost of borrowing to a level not seen since 1951 and equals the all-time record low in the UK. Homeowners with a typical £150,000 mortgage will see their monthly repayments reduced by £85 if lenders pass on the cut in full. Those with a £250,000 home loan will £142 a month better off. Following last month's reduction, 87 out of 95 lenders with a standard variable rate passed on some of the cut to their customers, although 57 did not reduce their SVR by the full amount, with some cutting it by only 0.25 per cent. And at the same time, up to 1.2 million homeowners with tracker mortgages, which should automatically move up and down in line with the base rate, are unlikely to benefit from the full cut due to the terms of their deal. Britain's biggest mortgage lender Halifax has confirmed it will pass on the cut to its 600,000 borrowers with base rate tracker deals despite an option about not having to do so if the rate falls below 3 per cent.
ITN | December 4, 2008
