Banks welcome government action

Moves to support the banking industry and to inject liquidity into the money markets were welcomed by the UK's leading banks as they acted to cut interest rates on mortgages and loans.

Following yesterday's dramatic interest rate cut from the Bank of England high street banks have today responded by cutting their borrowing rates.

LIBOR - the benchmark inter-bank lending rate - has moved in line with yesterday's cut and this has allowed banks to cut rates to customers.

LIBOR fell overnight following the Bank of England's interest rate cut yesterday. All key rates have now fallen with the sterling now at 3.2125 for overnight borrowing and for three-month rate down to 4.49625.

Chief Executive Angela Knight said: "The banking industry recognises that government wants strong banks and is grateful for the support we have had. Banks are committed to doing their part to help rebuild the UK economy as well as ensuring we help and support all our customers - both lenders and savers."

"We know that many people are concerned about making ends meet in these difficult times and although the interest rate cuts will be welcomed by borrowers and home owners the banks have to balance the borrowing rates against offering competitive rates for savers. We urge any customer facing money trouble to speak to the bank sooner rather than later so we can work together to help find a solution in everyone's interests."