Base rate cut to 2% - commercial mortgages

05 December 2008

The Bank of England has announced that interest rates are to be cut by one per cent after yesterday's meeting of its monetary policy committee (MPC).

It means the base rate now stands at two per cent, its lowest level for 57 years.

The move could result in the cost of commercial mortgages becoming cheaper and borrowers on tracker products should automatically benefit from the decision.

Members of the MPC voted for the reduction following a "stall" in business investment and consumer spending, as well as the risk of inflation targets being missed, the Bank revealed.

The MPC felt that action was needed to help restore lending to more normal levels, it added.

Council of Mortgage Lenders director general Michael Coogan said the measure would help the wider economy.

Commenting on the response of lenders, he remarked: "It is not realistic to expect them all to react in the same way to the rate cut - although where they believe they can cut mortgage rates, they will."