The Bank of England’s Monetary Policy Committee (MPC) has cut interest rates from 1% to 0.5% in an attempt to revive the economy.

As rates get closer to zero, the bank runs out of room to cut the cost of borrowing to stimulate the economy. As a result, the bank is expected to try a new method of pumping extra money into the system. Economists suggest that it could opt to expand the money supply by up to £150bn.

David Whittaker, managing director of Mortgages for Business, said: “ As expected, the Monetary Policy Committee (MPC) has continued to use the tools at its disposal and slashed rates again to a record low of 0.5% . This will of course continue to improve the cash-flow of those borrowers on base-rate linked loans (without collars!) but unlikely to have much of an effect on new mortgage products.

“Only a third of lenders passed on any of last month’s 0.5% cut and we would expect even fewer lenders to act this month. That said, there are a handful of lenders (C & G, Nationwide, Skipton & Halifax) who have Standard Variable Rates (SVRs) that must never be more than a set percentage above Base Rate – they will have no option but to reduce their SVRs. For the rest, don’t expect much movement and for those looking to move house or remortgage, we believe that the products available now are probably as good as they are going to get; if you are looking to fix for the next 2, 3 or 5 years then now is certainly the time to act.”