Bank of England cuts base rate to its lowest level.

20 January 2009

Bank of England has cut base rate again and it now stands at 1.5%.Interest rate cut has triggered mixed reactions from savers and borrowers. It is fourth cut in a row and rate now stands at the lowest level in its history. For many savers it means less interest if they are not locked in a fixed rate deal. Just a few month ago there were savings accounts offering as much as 7%, today 1% is quite common. It is still possible to find savings accounts with rates above 4%, but you need to put down a decent amount. For many mortgage borrowers interest rate cut will not make any difference as many are locked into fixed rate mortgage deals. Despite the government urging banks to pass interest rates to customers, many lenders have failed to reduce their SVR rates after December rate reduction. Some big lenders like Lloyds and Nationwide have pledged that they will pass interest rate cuts to their customers. Customers with tracker mortgages will benefit as their monthly mortgage payments will go down. Despite the interest rate cuts it does not mean that mortgages are getting cheaper. Lenders expect bigger deposit and getting choosier. Cheapest deals are often available for mortgage with low LTV and your credit history expected to be spotless.