Interest Rate Going Down

The Bank of England is expected to cut interest rates later to their lowest for more than half a century; many commentators were surprised last month when the bank announced a dramatic cut in the bank rate from 4.5% to 3%.

Business leaders and economists have called for rates to be slashed to 2% to prevent the downturn deepening. Bank rates have never fallen below 2% from the foundation of the bank in 1694.

The bank is prepared to act decisively, with the economy slowing sharply. Governor Mervyn King told a parliamentary committee last week, "We will take whatever action we feel necessary on interest rates to steer the economy back into calmer waters.

An average property in the Uk is now valued at £163.605, found the Halifax, a level last seen in July of 2005.The annual rate of decline is compared by the mortgage lender by comparing the average house price over the past three months with the average for the same three-month period the year before.

Moneyfacts, the financial information service estimates that homeowners could see a saving of between £19 and £75 a month - depending on the size of the rate cuts and whether lenders pass on the cuts in full.

However, any further cut in rates is unlikely to be welcomed by savers who often depend on interest payments from their savings, as banks are also likely to cut the interest they pay on these accounts.

The Halifax will be publishing its formal house price prediction for 2009 later this month.