No doubt we have all heard the news that today we expect to hear figures showing that the economy has shrunk for the first time in 16 years, meaning the dreaded R word may indeed have hit Britain.

With fears of a recession, experts predict the Bank of England will cut the base interest rate to just 4 per cent.

Yesterday, several lenders, including the Abbey and the Royal Bank of Scotland cut their interest rates, meaning cheaper mortgages for many.  Those with tracker mortgages will see savings pretty much immediately, for a £100,000 mortgage, a 0.5 per cent cut will save tham £50 per month or £600 per year.

Some experts are predicting that next year, mortgage interest rates could go as low as 2 or 2.5 per cent.  That will give a welcome boost to the mortgage market.

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