The Bank of England cut interest rates from 5.75% to 5.5% in a pre-emptive measure to protect consumers and investors from an economic slow-down.

A slump in household spending and business investments have prompted The Bank of England to drop interest rates. It was the first drop in rates since 2005- when rates were lowered to 4.5%. Before this point interest rates had been in uptrend since 2003.

Halifax and Nationwide have cut their rates in line with the announcement which will put rivals under pressure to follow suit.

The 0.25% reduction means that the typical mortgage repayment of £100,000 will be reduced by £15- £20 a month.

David Evernden, Chairman of Kent Estate Agencies, comments:

"The rate drop will be especially good news for those who are coming off fixed rate mortgages shortly. Similarly, first time buyers will benefit as the lower rates help to reduce the burden of costs currently carried by those purchasing their first home."

In a statement explaining its decision, the Bank’s monetary policy committee blamed deteriorating conditions in financial markets and “a tightening in the supply of credit to households and businesses” that threatened to depress growth and allow inflation to fall too far below the official 2 per cent target.

Economists and investors are now predicting a fall to 5% over the coming months. Jonathan Loynes, from Capital Economics told CNBC, that he expected it to drop as low as 4%.

Kent Estate Agencies, comments: "This is just what the market needed. There has been considerable doom and gloom lately as we have had to endure the fallout from some significant national and international events. This latest rate decrease will at least go some way towards repairing the damage done. I’m hopeful this will be the turning point in consumer confidence that will set the market back on track again."