Interest rates slashed to 3%

06 November 2008



Interest rates will be cut to three per cent, a 1.5 percentage point drop, following a decision from the Bank of England today.

Estate agents in the South Buckinghamshire area have welcomed the news, saying it is "wonderful" if the cut is passed on through banks and building societies, reports the Bucks Free Press.

The cut seen today is the lowest interest rate since 1955 and is the biggest cut since 1981, with most previously predicting 0.5 or one percentage point drops.

David Perin, director of the JNP Partnership in south Buckinghamshire, says it is a sign the market has reached the bottom.

He tells the newspaper: "It's been in freefall for the last 12-18 months, this is a sign they're purposefully wanting the housing market to stand still."

Geoff Collins, a director at the Frost Partnership in the area, agrees and says it sends out a positive message, even if huge reductions on mortgages are not seen.

However, he states the government has further work to do on the housing market, telling the publication he thinks the threshold for stamp duty should be increased to £250,000 and mortgage rates should be lowered.

Michael Coogan, director general of the Council of Mortgage Lenders, says it is important the cut is passed on to consumers.

Chris Hardy, partner in the residential property team comments: "This is obviously good news for the millions who have existing tracker mortgages linked to base rate.

"However, since mortgage lenders do not source their funds for new loans at base rate, new entrants to the market mustn't get carried away and think that a new era of cheap and easy credit is upon us. Market confidence has taken a severe knock and it may take time before dropping prices begin to stabilise."


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