0.25 per cent interest rate cut
Updated on 07 February 2008
The Bank of England brings relief to hard-pressed borrowers by cutting interest rates to 5.25 per cent.
The cut is exactly what the City was expecting. And the news will be welcomed by mortgage holders, borrowers and businesses, worried that repayments would keep people out of the shops.
The last time rates were at 5.25 was April last year, so today's reduction will be a real help to struggling homeowners. On an average £100,000 mortgage, it means a £15 reduction in monthly payments.
But homeowners will want to know that mortgage lenders intend to pass this cut on to them.
Today's interest rate cut comes as the Office of National Statistics announces that tens of billions of pounds of Northern Rock's debt should be added to the nation's balance sheet.
This is embarrassing news for Gordon Brown because it pushes UK debt beyond 40 per cent of national income. The prime minister's "sustainable investment rule" says the amount the country owes should not exceed the 40 per cent level.
