A decision by the Bank of England to cut interest rates has been welcomed as a positive step to help boost the housing market.

The Bank’s monetary policy committee (MPC) voted to lower the rate by a quarter of a percent to 5%, the first time there has been any downward movement in interest rates since March 2020.

Announcing the cut, the Bank’s governor Andrew Bailey explained lower inflation had allowed for the reduction but warned people not to expect rates to return to the historic lows of 2008.

In a statement the MPC said: “Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further.”

Those on tracker mortgages will be cheering as they see an immediate reduction in monthly mortgage payments. Anyone on variable deals may also see a cut. However those on fixed rates face the prospect of significantly higher payments when their deals expire over the next few months and years.

Sheldon Bosley Knight’s director of residential sales, James Morton said: “This is a very positive step taken by the Bank of England.

“It is the first cut since 2020 and makes borrowing cheaper which is good news for first time buyers especially and those on tracker and variable rate deals.

“We are hoping for at least a further two cuts before the end of 2024, all of which will bring a renewed sense of optimism within the market.”