Bank of England decision offers little help to borrowers or savers

The Building Societies Association (BSA) has criticised the decision by the Bank of England to cut the base rate by 50 basis points to 1%, saying that it will harm both savers and borrowers.

Commenting on the decision, Adrian Coles, Director General of the BSA, said: "The rate cut is an assault on savers who will have seen their interest payments drop by 83% since July 2007. Savers dependent on interest income have not seen prices fall by a similar amount - their lifestyles have taken a significant blow.

"But the decision is also bad news for mortgage borrowers. Although the cut will benefit borrowers with tracker or variable rate mortgages, research by BSA has found that concern over getting a mortgage or getting a large enough mortgage is a much greater worry than affording mortgage repayments.

"Against such a background, today's decision means that people are less likely to save and the flow of funds into the mortgage market will be further disrupted."