Borrowers will benefit from rate cuts

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by Kay Murchie

The Bank of England cut interest rates yesterday from 5.75% to 5.5% which is good news for borrowers.

Customers of Nationwide and Halifax are to benefit further as both mortgage giants have announced that they will implement the whole cut immediately.

Both the Nationwide and Halifax said they would cut their standard variable rates (SVRs) by 0.25% from 1 January 2008. This has put pressure on other mortgage lenders to follow suit.

Nationwide is cutting its SVR to 6.99% while the Halifax is reducing its SVR to 7.5%. This will result in approximately £16 a month off the cost of a typical £100,000 mortgage. Those with a typical £140,000 mortgage will see their payments come down by £23 a month, while those who have borrowed a £250,000 home loan will be over £40 a month better off.

The cuts were unexpected as predictions from commentators were that lenders would delay reducing their mortgage rates due to the current credit squeeze.

Other major banks have announced that their mortgage rates are presently ‘under review’.