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Last Updated: Monday, 8 August 2005, 14:04 GMT 15:04 UK
Interest rate cuts: Are you affected?
Piles of money with calculator
Are you affected by this month's interest rate cuts?

The Bank of England's Monetary Policy Committee (MPC) has cut UK interest rates for August to 4.5%.

The move, the first reduction in two and a half years, had been widely predicted following concerns over UK manufacturing and consumer spending

Business leaders have welcomed the move but the British Chamber of Commerce (BCC) has called on the MPC to remain "vigilant" for further signs of weakness.

What's your reaction to this month's interest rate cut? Do you agree with the Bank of England's decision? Will the cut boost consumer confidence? Whether you work in business or are a consumer send us your comments and experiences.


This debate is now closed. Read a selection of your comments below.

The following comments reflect the balance of opinion we have received so far:

I do agree with the MPC's decision to cut interest rate, because this will encourage consumer spending and as a result, it would boost our economic growth after what the country has recently experienced following the London bombing.
Sarah, Surrey

A diabolical decision by the BOE. At a time, when the debt is spiralling out of control and house price rises are slowing down, this is the last thing that was needed. It will just encourage people to borrow more and cause house prices to rise again.
Sanjay, London, UK

All the comments on here so far seem to be about savings and house prices. The BOE's remit is to try and keep inflation at 2% and supposedly not concern itself with house prices which aren't included in it's inflation measure. So you'd assume it feels that inflation is dropping so an interest rate cut was needed, retail spending seems to agree with this. However, there are some considerable inflationary pressures at the moment, 2 key ones are rising oil prices and also the revaluation of the Chinese Remnimbi. We have been importing large amounts from China at low prices, keeping inflation down, but as the remnimbi gains value we will see inflationary pressures. Any drop in value of the pound (which lower rates will help cause) will heighten this effect and may well lead to rates having to increase in the future. We'll see.
Ben Pollard, London

As a saver without a mortgage, I will be considerably worse off. The banks have recently reduced my interest by a quarter of one percent - were they being perceptive or will I have to endure another cut in interest rates as the banks once again take advantage of the prudent saver? I wish there really was competition for savers but it seems that the financial industry are just not interested as there are no real alternatives.
Ray Hartlepool,

This reduction will only encourage people to add to what is an historic and monumental amount of debt in the UK. This will not help/affect the credit card interest, as these credit institutions are a law unto themselves and do not respond when rates are lowered, only when they are made higher! This is a foolish illusion on the road to national financial ruin and a ridiculous burden on those who save rather than spend.
Nancy, Edinburgh

All these people going on about this just getting people into more debt must try to understand that these people choose to take out more loans. If they are stupid enough to borrow to the max it is their own fault. Banks and finance companies are in business to make money-of course they want people to borrow lots!
Lianne, Manchester

Oh great, just when house prices were starting to turn towards more sensible/affordable levels us first time buyers are going to be priced out of the market again.
Rich, Oxford, UK

No real change. The day the bank decided to cut interest rates was the same day my electricity and gas company wrote to me telling me my bills were going up by the same amount! What the bank giveth with one hand the utilities taketh away with the other. One of those facts of life.
Dominick, London, UK

As pensioner I rely on interest on my savings
Berth, St Albans
Seriously affected. As pensioner I rely on interest on my savings. Community tax, utilities and postage will all rise. All my life I have been responsible and prudent. A mugs game.
Berth, St Albans

Our house went on the market two days ago and we agreed with the agent a selling price. However, he pointed out that if the MPC reduce the interest rate today then we should put the house on for an extra 10% from 500,000 to 550,000! Surely it's time estate agents were forced to fall in line behind legislation and not let them to be continually self-regulated.
Dominic Arnold, Brighton, UK

Having just had an offer accepted on my house, with a tracker mortgage to pay for it, this cut has come at exactly the right time for me. I really don't think house prices will increase much at this point though because the market is pretty dead at the moment - it can therefore only help first time buyers like me. Unless you are foolishly relying on interest on savings to make up a deposit for a house, you will be better off with this cut.
Ian, Manchester

I wish someone could explain what was going on!
Andrew, Reading
Why is the Bank of England trying to encourage spending and prop up the housing market when every time I turn on the TV I see more about how many people are already over borrowing on their credit cards and first time buyers cannot get onto the property ladder? Whilst I fully believe the BoE knows more than me, I wish someone could explain what was going on!
Andrew, Reading

Why should me and my husband as savers have to take a cut in interest to bail out all those people who have spent up to the hilt, took out massive mortgage and loans, it really annoys me.
Peggy, Stourbridge, West Midlands

As a retired person the impact on savings is obviously adverse and when combined with the UK's taxation rates makes, it is hardly encouraging to a savings economy which we understand the Chancellor still wants to encourage - especially after all the risky savings we have had to endure in recent years. I can't see a quarter of a percent making a massive impact on consumer spending either, and in view of the environmental damage from endless 'growth' perhaps a bit less spending would be more sustainable. Has anyone ever considered that we all simply have enough consumables and that this is why spending is slow?
Joan Rogers, Durham

We have been encouraged to save and now the system seems to be working against my savings
Fred To, Northampton, UK
I am retired and it affects me as my savings are earning less. We have been encouraged to save and now the system seems to be working against my savings. House prices are still too high and this cut in interest rate is giving the wrong signal to sellers and estate agents, the prices of houses should come down by at least another 10%. British industry has never been competitive; sustaining the 7.75% interest rate would have help lower pay to make us more competitive in the world; we are now really living on borrowed time. Even if interest rates came down to 3% I cannot see how that could help British industry to be competitive except that the pound would fall through the skies and we would be paying more for imports which always seem to be better made.
Fred To, Northampton, UK

How is this going to help? It will increase consumer debt as people borrow more, cause the housing market to start up gain and discourage saving for your future. The whole Alan Greenspan theory that you can spend your way out of recession is nonsense, ultimately you have to produce something to make money, and the fact that UK manufacturer industry is in such a mess shows this theory doesn't work. All it's doing is putting the recession off for the future when it will be a lot worse.
Tony Peters, Wimbledon

My mortgage is fixed for the next two years so this does not affect me. However this move may encourage people to spend more than they can already afford especially since the interest on their savings are reduced by this move, Christmas will be interesting this year. God help us.
Meko, Glasgow, Scotland

These little interest rate cuts merely keep house prices artificially high
Peter, Notts
It doesn't help me buy a house at all. These little interest rate cuts merely keep house prices artificially high. If you want to help first times buyers we need hundreds of thousands of new homes built and punitive taxes on buy-to-letters, not 16 a month knocked off mortgages.
Peter, Notts

Not again! Great if you've got debt, but if you've been prudent, saved, kept out of debt etc you keep being punished with interest rate cuts! I'm 24 now; I might be 50 before I can afford a house!
Luke, Carlinghow, W. Yorks, UK

This is bad news for my family. Were trying to get on the property ladder and, were pleased to see prices starting to fall to a level we could afford. It looks like that's going to reverse now.
Yates family, Suffolk

I can't afford to continue saving with such pathetic interest rates. Neither can I afford to buy a home for my family anymore in this wretched, over taxed country. I (like many others) am a hard working family man on an average wage who can just about support my family. We've been in a denied recession for years now. I'd like to know where this country's money is really being infiltrated. The rich are getting richer for doing less.
Mike Davies, Dover, UK

Lowering interest rates just encourages more people to go into debt that they can't afford
Caroline, London, UK
And once again, the Bank of England caves to whines from business that they're not making quite as much money as their fat cat directors and institutional shareholders want them to make. Who suffers? The public. Rates of bankruptcy amongst under 25s are at their highest since the last recession and lowering interest rates just encourages more people to go into debt that they can't afford. In the meantime, lower mortgage rates only benefit buy-to-letters who soak up the housing market with their short-term interest in rental gain, taking house prices further beyond the reach of first time buyers like myself, with such first time buyers being further penalised by the fact that our savings are hit with lower interest.
Caroline, London, UK

It is upsetting to see that we are being allowed to borrow so much money from banks, How am I supposed to teach my children the moral joy of saving when it has become the norm for people to carry so much debt? Whatever happened to the days where the only debt was a mortgage?
Anup, Derby, UK

How will this benefit a single man living alone? In order to buy a tiny terraced house in Reading I'd need to find 150k which means an income of ?50k (based on 3x household income). As a result I continue to line the pockets of a private landlord and see the prospect of owning my own home retreating ever further.
Kevan, Reading, UK

This cut should have come much sooner
Paul Martin, Chard
I feel this cut should have come much sooner and hopefully the forecasters have it right, and we will see another cut by the end of this year. Home owners are struggling and the small business has been hit very badly since the increases of 2003. We are struggling to compete with the rest of Europe and the Far East is taking us to the wire.
Paul Martin, Chard

For somebody like myself struggling to pay a mortgage this is brilliant news. I was a first time buyer 2 years ago trying to get on the property ladder which I managed, but have found it difficult with the rate rises that have occurred.
Lorraine Abel, Walthamstow

I have just received my mortgage offer today. I have taken out a two year tracker mortgage. Therefore I am already better off with the interest rate cut today so the gamble paid off for me so far. I hope this trend continues for the near future.
Shazia, Rotherham, England

Low interest rates are vital for a healthy economy that encourages entrepreneurship and business. I don't have much sympathy for people moaning that the interest on their savings is too low. If people want to get returns on their cash they should make an effort and invest it like everyone else has to.
Chris, Aylesbury

This isn't good for first time buyers. As a graduate with 4 years experience, and a generous contribution towards a house from my parents, even the most basic of ex-council houses around here are 20,000 over what I can raise, and that assumes I didn't need the little things in life like furniture. All an interest rate cut does for me is reduce the interest on my savings, which are my only hope of ever buying a house. We don't need cheaper mortgages, we need lower house prices!
Ross Nicoll, St. Andrews, Fife

As an estate agent I am delighted to learn the news of today's interest rate cut. Recent months have seen a dreadful slowdown in the demand for property, much to do with a lack of confidence. This rate cut will hopefully bring any 'wavier's' (many first time buyers) into the market place. Coupled with a change with the lower rate of stamp duty, first time buyers should recognise a great opportunity!
Adam J Pritchard, Stourbridge, West Midlands

How is this going to encourage me to spend more money when as a pensioner my income will come from interest earned on capital savings?
K. Olaofe, Swindon, UK

I'm happy. My monthly mortgage payments will fall by about 16 a month - every little helps!
Jason McFerran, Belfast

The returns on my savings are going to be even less
Gary, Solihull
Well I was saving money to get on the housing market, but now the returns on my savings are going to be even less and house prices are probably going to spiral further out of control. Well done BofE. Another fine mess you got us into!
Gary, Solihull

Although I am currently living in Canada I still have property and bank accounts in UK. Every interest rate change affects both my mortgage and savings. I always feel better seeing less interest applied to my mortgage than less interest on savings. As usual I think this rate change is 'too little - too late' for the economy.
Neil Fergusson, Moose Jaw, Canada

We're first time buyers and took a gamble going on a tracker rate so we're relieved that our payment has gone down already in just our second month. Hopefully, the same will happen again soon as we've got loads to buy for the house!
Davo, Sheffield, UK

Lower interest rates do not benefit, or encourage savers. Lower interest rates will lead to a more buoyant housing market and push that first rung of the housing ladder even further from the grasp of the first time buyer. Perhaps we should be grateful that we still control our own interest rates and are not forced to accept the 2% figure that the ECB has fixed today. Consumer spending is too high, personal debt is too high, Interest rates need to be raised to foster an ethos of saving and not borrowing.
Paul Wakeley, South Shropshire

The cut in interest rate is long overdue. First time house buyers need every assistance. The general public need confidence that stability with the economy is on tract.
Tony Harris, Worthing West Sussex

Great! NOT! We need the pressure to be kept up on mortgages. House prices remain way too high. Drops in interest rates may well re-ignite the boom, and at the least prevent further falls. Thousands of young people remain priced out of home ownership, resulting in a stagnant market for all!
Christopher Cook, Crewkerne, Somerset

This interest rate cut is a life saving move for our company. Sadly it is not enough and a little too late to save some of the smaller companies. Without this rate cut, our financial situation would have worsened. Long may it continue.
Hamid Moazzeni, Haverhill, UK




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