The Bank of England Monetary Policy Committee is cutting interest rates by 0.5 per cent.
The fifth consecutive cut brings rates down to 5.5 per cent. The decision has been welcomed by the Council of Mortgage lenders.
CML director general Michael Coogan says: "While there is some question about how much further rates can fall this latest cut will bring a welcome fillip to mortgage borrowers.
"There is no inflationary pressure showing through in the housing market so there need be no worry about the risk of an unsustainable boom."