Interest rate reduction welcomed

Published: December 07, 2007

Yesterday's (December 6th) decision by the Bank of England to reduce the interest rate to 5.5 per cent has been welcomed by a leading mortgage industry association.

The Council of Mortgage Lenders (CML) highlighted the particular benefits that the cut will have for homeowners set to come to the end of their current fixed rate mortgages next year.

But they called on the Bank and government to take further steps to encourage mortgage lenders to offer property owners accessible deals.

Michael Coogan, CML director general, said: "A reduction in interest rates is exactly what the market needs and will benefit consumers. This will reduce the risk of payment shock for the 1.4 million borrowers coming off fixed rates in the next year."

"However, we still need the authorities to intervene more aggressively to open wholesale funding markets. There is a real need to minimise the shortfall between the demand for mortgages and lenders' capacity to supply them," he added.

In the wake of the Bank's decision, several lenders have announced 0.25 per cent cuts to their mortgage rates from January 1st, 2008, with the Nationwide's Base Mortgage Rate reduced to 6.99 per cent, the Co-Operative cutting its Standard Variable Rate (SVR) to 7.49 per cent and the Halifax dropping its SVR to 7.5 per cent.