INTEREST rates were cut for the first time in two years yesterday - but experts warned more reductions are unlikely.
As predicted, the Bank of England slashed the cost of borrowing by 0.25 per cent to 4.5 per cent, triggering lower mortgage rates and easing the strain on family budgets.
But business and union leaders labelled the cautious quarter per cent cut was "too little, too late" to save manufacturing jobs.
And experts warned the move was an attempt at quick fix and likely to be a one-off with no more cuts until next year. Some lenders were accused of shortchanging customers by failing to pass it on. The biggest mortgage lender, the Halifax, took less than two minutes to pass the full 0.25 per cent cut to borrowers.
The bank said it would slice its standard variable rate from 6.75 per cent to 6.5 per cent, knocking £15 a month off repayments on a typical 25-year home loan of £100,000.
But less than half its 2.5 million customers will benefit as the rest are on fixed-rate deals. HSBC is also cutting its standard variable mortgage by 0.25 per cent to 5.5 per cent from September 5.
Several others such as Nationwide Building Society and Abbey said they were "monitoring the market".
One economist said: "I can't see why they are taking their time. The cut was widely flagged. It can't have caught anyone on the hop."
The cut - which comes after five quarter point rises since November 2003 - follows signs of slowdown such as falling house and car sales. Manufacturing has also suffered as economic growth hit a 12-year low.
British Retail Consortium director-general Kevin Hawkins said: "The cut will take several months before it works through to High Street consumer behaviour."
The Transport & General Workers Union's Peter Booth added: "UK interest rates are still over double those in Europe. This makes no inroad into the chasm which puts manufacturers at a disadvantage." The eurozone rate is two per cent.
But CBI chief Sir Digby Jones said: "This cut will be a catalyst for growth and will provide a boost to consumer and business confidence."
Remortgage info from the mirror
Remortgage home page
