Rate cut 'could reduce debt'
Published On 7 December 2007
Debt levels in the UK could be reduced as a result of the Bank of England's rate cut, as long as lenders choose to pass the savings on to their customers.Beccy Boden Wilks, spokesperson for the National Debtline, said that the Bank's rate reduction from 5.75 per cent to 5.5 per cent should make a difference.
"People who are coming off their fixed-rate mortgages might start to feel the difference, if the various interest rate rises have taken them above what they were paying before," she said.
Homeowners with standard variable mortgages might also see the benefit from the base rate cut in their monthly repayments.
"On a mortgage of £200,000 [a further cut] would mean that you're paying back £80 less each month; but it's whether or not [lenders] are actually going to pass that on to the borrower, or whether they'll just absorb that themselves," said Ms Boden Wilks.
Nationwide and First Direct have already announced they will reduce their standard variable rate from January. Most other mortgage providers are expected to also cut rates.
