Rate cuts will help borrowers

Published: February 12, 2008

The latest round of cuts to the base rate of interest will help mortgage borrowers to service their debt in 2008.

That is according to the Council of Mortgage Lenders (CML), which said that mortgage interest rates will fall as a result of the cuts.

A 0.25 percentage point reduction in December was followed by another in February, bringing the base rate of interest down from 5.75 per cent to 5.25 per cent.

Michael Coogan, director general of the CML, said that he believes the cuts will make life much easier for those who have taken out a loan.

"Affordability has been stretched further in 2007 but the recent base rate cuts and the expectation of future cuts will ease debt servicing burdens in 2008," he commented.

"The impact of payment shock on the large numbers of borrowers coming to the end of fixed-rate mortgages will also be less than we anticipated last year.

"For first-time buyers, the combination of subdued house price inflationand lower mortgage rates means affordability should ease slowly as the year progresses," added Mr Coogan.

February's reduction brought the base rate down to its lowest level since January 2007.