This Thursday, the Bank of England’s Monetary Policy Committee is due to meet again and in the midst of more gloomy recession figures, the news could be good for mortgage holders with variable rate or capped rate mortgages.

Following last month’s 1.75 percent reduction in the base rate, experts are predicting that the Bank of England is likely to reduce the interest rate by another 1 percent, which would bring the interest rate to a record breaking 2 percent base rate, and also putting added pressure on mortgage lenders to reduce their variable rates.

Howard Archer, chief European and UK economist at forecasters IHS Global Insight, said: “We believe there is an even stronger chance now that the MPC will deliver a 100 basis point (one per cent) cut, taking interest rates down from three per cent to two per cent. We expect interest rates to fall to one per cent in the early months of 2009 and then stay there for the rest of the year.”

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