Legal & General respond to base rate cut

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Legal & General respond to base rate cut

Fears about growing debts have contributed to an increase in the popularity of fixed rate mortgages, according to Legal & General's mortgages director.

Responding to today's base rate cut, Ben Thompson said the average family is £1300 worse off a year, following massive increases in tax, utility and household costs.

He said these have risen by more than a third in the past four years, contributing to concerns about managing income alongside mounting debts.

This has resulted in a growing proportion of homeowners opting for a fixed rate mortgage, with half of mortgages acquired through Legal & General's fixed rate last month.

This was down from two-thirds in October last year. Mr Thompson said the mortgage provider believes that this is "a high proportion for a falling interest rate environment", and warned that "These borrowers may be pegging themselves in at too high a rate".

In a widely predicted move, the Bank of England cut interest rates to 5.25 per cent from 5.5 per cent, in response to signs of a slowing UK economy.
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