The Bank of England's Monetary Policy Committee has cut its interest rate again this morning by 50bp...
The Bank of England's Monetary Policy Committee has cut its interest rate again this morning by 50bp to 4%, representing a much sharper slice than analysts had anticipated and taking UK rates to its lowest level since 1963.
This is the seventh cut the Bank has ordered this year in the hope it will help to protect the British economy from the global slowdown and avoid a recession.
The cut was more aggressive than had been expected, and is expected to be welcomed by the manufacturing sector and unions, which is suffering most from the slowdown in UK and global sales and with it growing job losses.
The European Central Bank also announced soon after that it was cutting its interest rate by 0.5% to 3.25%, starting from Wednesday 14th.
Michael Coogan, director general of the Council of Mortgage Lenders has welcomed the Bank of England's seventh rate cut this year, however it is unlikely to help maintain the UK housing market's previous momentum.
"Today's rate cut will help to mitigate the potential effects of a worsening outlook for consumer confidence and unemployment. It is likely to feed through to lower mortgage rates but unlikely to fuel the housing market, which is already beginning to show signs of cooling down," says Coogan.
"The CML expects mortgage lending to hold up next year, despite the worsening outlook for the economy. However, house prices are likely to experience much lower growth next year of around 3%, compared to an anticipated 11% this year."
Following the MPC's decision to decrease the bank base rate by 0.50%, Intelligent Finance and Charcol have already cut their mortgage rate to all mortgage customers.
Intelligent Finance's initial discounted mortgage rate will be reduced from 3.85% to 3.35% with effect from 5 December 2001 while its standard variable rate will be reduced from 5.35% to 4.85%.
Charcol, the mortgage intermediary, has also cuts its mortgage loan rates by 0.5%
Customers with tracker discount mortgages of up to 75% LTV will now be charged at 1.79% for six months, while its 95% LTV tracker discount mortgage rate has been altered to 1.99% for six months.
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