The Bank of England has announced a surprise interest rate cut taking the key repo rate to 3.75% fro...
The Bank of England has announced a surprise interest rate cut taking the key repo rate to 3.75% from 4%.
It is the first rate cut since November 2001, and has surprised the market despite evidence in recent months of an economic slowdown.
The reasons behind the cut will not be known until the Monetary Policy Committee, which sets the rates, releases the minutes from today's meeting.
However, national mortgage IFA Charcol is warning potential house buyers not to expect the full effects of the cut to be passed on by lenders.
"Banks and building societies are unlikely to reduce their mortgage SVRs fully in line with the base rate cut," says Ray Boulger, Charcol's senior technical manager mortgages.
"UK bottom line was in need of a boost, and the recent easing of house price rises clearly reassured the Monetary Policy Committee that a quarter point cut was a prudent means of providing it."
Because lenders are unlikely to cut their SVRs, Boulger says borrowers with tracker mortgages will do best, as these must pass on any cuts to the base rate.
The rate cut has not boosted the FTSE because fund managers and analysts do not know what information the MPC may have used to justify the cut and which may not currently be public knowledge.
The FTSE 100 index is currently down about 34 points at 3,644.
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