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Relief for borrowers as rate hits 3%
The rate cut will come as a surprise to many as it was feared the Monetary Policy Committee would reduce the rate by 0.5 per cent. Industry advisors warned that anything less than a 1 per cent cut would be too little too late for the economy.
The rate cut was anticipated by lenders and they consequently withdrew tracker mortgages from the market. Anyone with a tracker mortgage will see a reduction in their monthly repayment; lenders usually pass this on to borrowers the following month. This would mean borrowers who are currently on the SVR (standard variable rate) a 1 per cent cut would mean £92 a month off the cost of a £150,000 mortgage.
Some lenders such as Cheltenham and Gloucester have agreed to pass the full cut on to their customers and reduce rates. And on the stock market, the FTSE 100 plunged by more than 3.5 per cent this morning despite the likelihood of an interest rate cut.
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