The Bank of England's monetary policy committee cut the base rate to 5.5 per cent yesterday and the news is an "early Christmas present" for homeowners, says Fair Investment.

The investment firm claims that the decision will help first-time-buyers onto the housing ladder and reduce monthly payments for people with variable rate mortgages.

"This cut should make it cheaper for taking out a new mortgage and also easier for the millions of borrowers coming out of low fixed-rate mortgages to find a new deal," said James Caldwell, director at the company.

The Bank reported that recent market volatility have led to a restriction in credit for households and business.

Richard Farr, director of the Association of Mortgage Intermediaries, said that a cut in the base rate in December was "an unusual step" but that it may serve as a "timely boost" to the property market.

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