Pressure eases on homeowners as bank cuts rates

09/10/2008

The Bank of England cut interest rates by 0.5 per cent yesterday.

Mortgage firms have reacted positively to the news - with the unusually sharp rate reduction making their lending costs less expensive.

Lenders including RBS and the Halifax have already announced that they will now be cutting their standard variable rates by 0.5 per cent, too.

This should, in turn, make repayments easier to meet for many of their customers - helping to limit the threat of repossession.

The government also announced yesterday a new package of measures aimed at boosting confidence in the banking sector.

Around £50 billion is to be spent on buying up shares in banks with public money - while Bank of England lending to the financial services sector will also be upped.

Michael Coogan, director general of the Council of Mortgage Lenders, commented: "The package of bank funding and capital measures is further strengthened by this rate cut.

"All this decisive action augurs well for an improving market situation looking ahead, even though no-one is pretending the tough times are over yet."

The Bank of England's base rate now stands at 4.5 per cent, following the reduction.

Tags; Housing Debt and Bills, Young Family Finances,

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