Bank Interest Rates hits 314 year low

The Bank of England has cut rates to 1.5%, making it the first time rates have fallen below 2% in the bank’s 314 year history. The half percentage point reduction brings interest rates below 2% for the first time since the Bank of England was founded in 1694.

Manufacturers’ association EEF said the move was “too timid”, and that the Bank should have cut rates further.

The Bank has now reduced rates four times from October’s 5% level. A further cut had been widely expected by analysts, particularly after the minutes of December’s MPC meeting revealed the members of the committee had considered an even larger cut than the 100 basis point reduction they eventually voted in favour of.

Most mortgage customers with tracker deals will automatically have the cut in interest rates passed on to them by their bank or building society. Customers with an average £150,000 repayment mortgage will see their monthly bill drop by £46. Those tracker deal customers with a £250,000 mortgage will see their monthly payments drop by £76.