April rate cut is on the cards

Published: April 04, 2008

It looks increasingly likely that many people will see their mortgage interest rates fall in April.

That is according to a new poll of UK financial institutions, which showed that 75 per cent expect the base rate of interest to be cut this month.

The Bank of England's Monetary Policy Committee (MPC) is due to announce its decision on April 10th.

The majority of those questioned said that they expect the base rate to be cut by 0.25 percentage points, bringing the rate down to five per cent.

A reduction would be welcomed by borrowers, many of whom would benefit from reduced mortgage interest rates.

"We believe that the increasing downside risks to UK growth stemming from tight credit conditions will prompt the Bank of England to trim interest rates by a further 25 basis points to five per cent at its April meeting," said Global Insight economist Howard Archer.

"However, it is an extremely close call, given that inflation risks currently remainelevated. Further out, we expect interest rates to fall to a low of four per cent in the first half of 2009," he added.

The MPC chose to maintain the base rate of interest in March following a reduction in February.