Interest rates slashed to just 3%

Posted: 07 Nov 2008 08:58:34 GMT

The Bank of England has reduced interest rates by a massive 1.5 per cent to a 54-year low.

On Thursday November 6th, its monetary policy committee (MPC) decided to reduce the national base rate to three per cent, in a last ditch attempt to stimulate the economy and stave off recession.

A statement by the Bank read: "There has been a very marked deterioration in the outlook for economic activity at home and abroad."

Although there is no guarantee that the lenders will pass this cut onto their customers, many mortgage payers with tracker deals could be in for big monthly savings.

According to the Times, homeowners with a £150,000 interest-only tracker mortgage at base rate would be in line to save £190 a month.

This represents the lowest interest rate under the MPC, which took over base rate duties in May 1997. Previously, the largest cut ever made by the committee was 0.5 per cent.

The last cut larger than today was a two per cent reduction to the base rate, which the chancellor made in March 1981.

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