In line with other central banks around the world, the government has cut interest rates by 0.5 per cent to 4.5 per cent.
The money will come from the taxpayer, and it's hoped that the cut in rates will restore confidence in the economy. So far, seven banks and one building society have cut their rates in response. From 1st November, Halifax will cut its standard variable rate (SVR) from seven per cent to 6.5 per cent, as will Lloyds TSB. Woolwich, First Direct, Royal Bank of Scotland and NatWest will also cut their SVRs by half a per cent.
Good news for an estimated four million UK households who have existing tracker mortgages. It's also hoped that the rescue plans will mean a greater availability of mortgages. However, it does also mean that rates for saving accounts are likely to be cut by some banks and building societies.
So, will the news help boost the property market? 'All this decisive action augurs well for an improving market situation looking ahead,' says Michael Coogan, director general of the Council of Mortgage Lenders (CML). 'Even though no one is pretending the tough times are over yet.'
Tough times indeed. No one expects the property market to recover quickly - and reaction to the news today has been welcoming but fairly flat - or, some would say, realistic. Many households will be a few pounds richer each month, which should boost confidence - and spending - in the short term. What's our view? We think it will take quite some time for the market to begin to recover. And in the meantime, we're gearing up for a winter of scrimping, saving and keeping our eyes glued to the market. Want to do the same? Keep coming back here for a touch of 4Homes help...
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