Borrowers buoyed by unanimous rate cut decision

Posted on 19 December 2007 by Charcol

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The decision to cut the Bank interest rate earlier this month was unanimous, minutes published today reveal.

The Bank of England lowered the Bank rate to 5.5% on 6 December, the first cut since August 2005. The move came after five successive interest rate rises, designed chiefly to keep the rate of inflation near the government's target of 2.0%.

The minutes show that the Bank's Monetary Policy Committee had discussed "anecdotal evidence of lenders reducing the availability of some mortgage products".

This, the committee noted, would lead to even higher mortgage repayments for many borrowers coming off fixed-rate deals, which could in turn reduce consumer spending and add to the downward pressures on inflation.

The unanimity of the Banks' most recent decision may strengthen borrowers' expectations of another rate cut early in 2008, a move that had already appeared more likely after yesterday's news that inflation remained steady at 2.1% in November.

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