Interest rate cut to be passed on to borrowers

Many of the biggest mortgage lenders in the UK have pledged to pass the recent interest rate cut onto borrowers.

HBOS, Barclays, HSBC, Lloyds and Nationwide all said they will reduce their standard variable rate mortgages following the cut in interest rates. The reduction in interest rates to 5.25% will take around £16 a month off an average £100,000 mortgage.

When the announcement to cut interest rates was made, the Monetary Policy Committee said that while inflation was just above the 2% target, food and fuel prices could rise “possibly quite sharply” in the coming months. The interest rate cut is designed to keep this rise in check.

Many in the housing industry were hoping for a 0.5% cut this month, and still expect the MPC to make further interest rate cuts in the coming months to stimulate the housing market.

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