At last, the Bank of England has responded to the concerns of millions of beleaguered borrowers, by announcing a cut in its base rate from 5.75% to 5.5%.
The reduction brings to an end a succession of rate increases since the late summer of 2006, which had seen mortgage costs rise by about £150 a month on a typical £150,000 home loan.
This is good news for many borrowers, especially those on tracker mortgages: they will see the cost of their home loans fall automatically, probably early next month.
For those on variable rates, or SVRs, the news is mixed so far: although Halifax, Nationwide and First Direct, plus a few smaller lenders said immediately they would reduce their rates by the full 0.25 percentage points, at the time of writing other institutions are still playing a waiting game.
The chances are most of them will fall into line and cut their SVRs, although the decision may take a few days to filter through.
What does this mean for borrowers on fixed rates - up to 1.4 million of whom come to the end of their terms next year? Many others whose deals have recently finished have been hanging on in the hope of getting a better rate.
Put simply, if you are hoping this cut - and possibly another one early next year - will impact significantly on future fixed rate deals on offer, maybe you should think again.
The reality is that the current credit squeeze, and therefore the cost of borrowing on the money markets, is likely to remain relatively high for some time to come. This means it probably makes more sense to fix now, or as soon your deal comes to an end.
That way, you get to "bank" some instant mortgage savings rather than wait in the of something better - by which time you will be paying more in interest, possibly for many months.
Our mortgage comparison tool compares more than 8,500 UK mortgage deals, so you can get a thorough perspective on what's available in your area by comparing now. However, there are two deals that have particularly caught my eye - click on the links below to find out more but bear in mind that all rates are subject to change:
Yorkshire Building Society - A tracker mortgage with an extremely low pay rate at 4.99% that tracks the base rate less 0.76% until February 2010. There is a 2.5% fee which is expensive, but only 0.25% needs to be paid up-front.
Alliance & Leicester - If you don't want a tracker rate, consider a discount deal and this is a good long-term option with a rate of 6.19% for five years. It has a higher interest rate than some, but a low fee of £149.
The key with re-mortgaging to tracker deals is to act quickly because mortgage lenders are likely to adjust rates as soon as they feel confident that rate cuts are on the agenda. So don't hang around and beat them to the punch.
The same could be said for savers too.
With rates almost certain to drop again next year, interest on savings accounts may fall accordingly - which of course, is bad news for savers. So you should be quick off the mark and move to the leading deals while they are still available - the savings comparison tool will give you an overview of what's available.
Ironically, there is a new market-leading savings rate now available - the West Bromwich Building Society Premier Bonus Tracker 4 now offers 6.54% AER. It's a good long-term deal as it is guaranteed to be 0.85 percentage points above the base rate until 31 May 2008.
Unfortunately however, it does have withdrawal restrictions - only six withdrawals can be made per year - and as it's a tracker account its rate will fall as soon as the base rate is cut.
There are plenty of other attractive offers in the market without these limitations including the Alliance & Leicester eSaver at 6.5% AER and the ICICI HiSAVE Savings Account at 6.41% AER - the latter deal guaranteed to be at least 0.3% above the base rate until 31 December 2011. Again bear in mind that all rates are subject to change, particularly after an MPC rate decision.
Clearly the deals are out there for savers and borrowers - but with no real certainty in the market it's vital to act now and grab these offers while they are still available.
DISCLAIMER: Please note that any rates or deals mentioned in this article applied at the time of writing and may no longer be available/applicable today.
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