Bank of England drops interest rate to historic low
Posted on January 09th 2009
The Bank of England cut the interest rate by 0.5 per cent yesterday to take the interest rate to its lowest level, 1.5 per cent, in its 315 year history.
The bank felt it had to make the further cut, after the big cuts in November and December, to help the economy as it is predicted to continue sliding in the first half of 2009.
The cut is not only designed to stimulate business activity but to give households more money in their pockets to spend, primarily through reducing their mortgage payments.
Mortgage customers on a tracker deal will automatically get the rate cut passed to them, unless they have already hit the minimum interest rate imposed by their lender.
Those on their lenders standard variable rate (SVR) must wait for their lender to decide if they are going to pass on some or the entire cut. Lenders that have said they will pass on the cut in some form to their SVR customers are Lloyds TSB, HSBC, HBOS, Nationwide and the Skipton Building Society.
The rate cut could give customers an extra £46 per month, based on the average mortgage of £150,000, in their pockets.
Another area that households can save money is to make sure that they have the most competitive house insurance in place. At insuremyhouse.co.uk customers can get a comparative online quotation from a panel of UK insurers.