The Bank of England has cut interest rates by a quarter of a point to 4.5 per cent, after many analysts predicted that a cut was imminent.
It was the first rate cut the Bank's Monetary Policy Committee (MPC) had made since July 2003.
The 0.25 per cent drop in interest rates will cut variable rate mortgage repayments for the millions of homeowners, as well as those on discounted rate, tracker, and capped mortgages.
However, the reduction will also see a fall in the rate of interest paid on many savings accounts, thus making saving less attractive and increasing the amount of spending in the economy. To read more about mortgages, click here.
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