moneysupermarket.com: Interest rates cut to 4.5%

Commenting on the surprise Bank of England cut interest rates from 5 per cent to 4.5 per cent, Louise Cuming head of mortgages at moneysupermarket.com, said: "This is welcome and decisive action, especially as it has taken the market by surprise. Whilst the Bank of England has sacrificed its battle with inflation in favour of a war with recession, it will bring immediate relief for the 4.2 million borrowers with tracker mortgages (36 per cent of the mortgage market) who will see significant monthly savings, and it is a vital move to increased confidence in the market. A family with a typical £150,000 mortgage will be over £40 a month better off, a saving of almost £500 a year.

"However, as a note of caution this is not a magic cure all and we won't see the either the mortgage or the housing market bouncing back to where it was 18 months ago, sadly too much water has passed under that bridge to be ended by a ‘quick fix'. Lenders won't change their strict attitudes to risk just yet, and the cut may not filter through to rates for new borrowers and first time buyers, so not everybody will feel the benefit. It will also be interesting to see if all banks adjust their Standard Variable Rate, and by how much - although I imagine the Treasury will be putting pressure on lenders to pass on the full cut."