Interest cuts

Evening Chronicle (Newcastle, England), April 10, 2008

BANK of England policymakers cut interest rates to 5% today in the latest attempt to shore up the economy in the face of a deepening credit crisis.

The quarter-point cut is the third since December and comes amid signs of gathering economic gloom, with figures earlier this week showing house prices fell 2.5% last month - the biggest monthly drop since the property crash of the early 1990s.

Today's decision will be a welcome boost to cash-strapped borrowers, already under pressure from soaring inflation.

Monthly repayments on a pounds 100,000 mortgage will fall by pounds 16 if lenders pass on the cut, reducing them from pounds 722.80 to pounds 706.77, based on a new rate of 7%. But there are fears many lenders will not pass on the reduction to borrowers.