Submitted on Friday 12th December 2008
BoE cuts rates to 3%
The Bank of England has cut rates today by 1.5% to 3%, the largest reduction since 1981. The news comes after a week of poor economic data and calls from UK industry to ease the pressure as we face the onset of a recession.
For those with base tracker mortgages or commercial loans linked to BoE base rate, this means an instant reduction in rate by 1.5%.
There have been fears that those with variable rate mortgages would not benefit. On Wednesday in the Houses of Parliament, Gordon Brown responded to these concerns.
"We want the banks and building societies to pass on the interest rate cuts to their mortgage holders," he said.
"What we have been trying to do over the last few weeks is get the liquidity into the system, recapitalise our banks and then get them to resume the lending that is necessary."
Lloyds TSB has promised to pass the rate cut in full to its customer, stating that their standard variable rate would never be more than 2% above Bank of England base rate.
