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Call issued for interest rate cut

A further cut to interest rates, which could make home loans and bad credit loans alike cheaper to pay off, has been recommended by mortgage experts at John Charcol.

The Bank of England's Monetary Policy Committee (MPC), the panel which meets each month to set the base rate, has made two 0.25 per cent cuts in recent months, so that the rate now stands at 5.25 per cent.

This contrasts with the far sharper three per cent of cuts administered over the same period by the MPC's US equivalents at the Federal Reserve.

Concerns over rising inflation - which is generally worsened by rate cuts - are believed to have prevented the Bank from moving more decisively.

Recently, the government announced that inflation might hit three per cent next year - a whole percentage point above its own target.

"The hope for buyers and homeowners, will be that the MPC is not deterred from implementing another rate cut soon, by having to write a letter of explanation to the Chancellor to explain why inflation has exceeded three per cent," John Charcol analyst Katie Tucker commented.

"However, cash-strapped homeowners will be relieved to know that some relief to their purse-strings may still be due."

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