BORROWERS will welcome today’s quarter per cent cut in interest rates - provided banks and building societies pass on the reduction.

The Bank of England’s Monetary Policy Committee reduced the official Bank Rate 5.25 per cent.

It also said that credit was tightening for households and businesses, with an easing of consumer spending growth.

While the MPC admits to some concern over inflation pressures, it believes a quarter per cent cut is necessary to meet the two per cent inflation target.

Chris Coates, managing director of Galliford Try Homes, which builds houses in Kent, said it was good news for homeowners but called on lenders to pass on the cut to borrowers.

“I now hope to see lenders passing on today’s cut to homeowners, easing the path for both first time buyers and those coming to the end of fixed rate deals,” he said.

“While we have experienced a continued interest from new homebuyers since the start of the year, today’s decision will instil further confidence in the market. A second rate cut, taking rates down to five per cent, along with sensible lending should ensure a steady market for 2008, with the UK avoiding much of the turmoil currently experienced in the US.”