Interest rate cut 'could help ease mortgage rates'

Date:Tuesday 7th October 2008

Mortgage holders could benefit if the Bank of England monetary policy committee (MPC) cuts interest rates this week, it has been claimed.

The Fair Investment Company (FIC) said that if the MPC slashes the rate at its meeting on Thursday, as it is expected to do, homeowners may experience relief from rising mortgage rates.

According to the FIC, most analysts expect the rate to be cut from five per cent to 4.75 per cent.

It has been at that rate since April due to high inflation.

The FIC also reports that some analysts predict mortgage rates will fall to 3.5 per cent eventually in order to prevent a long and serious recession in the UK.

Howard Archer, chief European and UK economist at information provider Global Insight, predicted last week that the interest rate will go down to 3.25 per cent in 2009.

Mr Archer is among analysts who expect it to be cut on Thursday and believes it could drop to 4.5 per cent by the end of this year.