Survey reveals rate cut expectation - commercial mortgages

13 March 2008

A new survey has revealed that the majority of Britons expect interest rates to be under five per cent by the end of 2008.

Finance website Fairinvestment.co.uk revealed that 56 per cent believe the Bank of England''s monetary policy committee (MPC) will lower the rate more than once before the start of 2009.

This number comprised 29 per cent who forecast the base rate to fall to 4.75 per cent and 27 per cent expecting a reduction to 4.5 per cent.

Of the rest, 21 per cent tipped one fall to five per cent and nine per cent expected the rate to remain unchanged.

Further cuts in rates could help reduce the cost of commercial mortgages.

Commenting on the findings, Fairinvestment.co.uk director James Caldwell predicted that the MPC would trim the rate "with an air of caution" rather than making US-style sweeping cuts due to fears about inflation and the general state of the economy.

In his budget speech yesterday chancellor of the exchequer Alistair Darling announced he would be writing to the MPC to reiterate that the inflation target rate remains at two per cent.