For the second time in three months, the Bank of England Monetary Policy Committee has cut interest by a quarter of a percent. We take a look at what this means for the consumer...

Not since the year of Winston Churchill's death have mortgage interest rates been so low. While some people grooved along to the sounds of the Beatles and the Stones in their heyday, others were shrewdly fixing their mortgage repayments for as long as possible to take advantage of cheap loans.

However, despite some reports indicating the contrary, the Bank of England Base rate has actually been lower than its current level at various points during the last three decades (most recently in 1998!), but the cost of borrowing for the consumer has not.

Why not? Home buyers are benefiting from a unique set of conditions that are driving down the cost of borrowing. The housing market is pretty buoyant again - demand is high for mortgages and remortgages. The high volume of product sales means lenders can enjoy large economies of scale, which are further enhanced by massive technological changes to the way lenders administrate their business.

There are also unprecedented high levels of competition in the market, with increasing product transparency, higher levels of product awareness among consumers, new players coming into the market from abroad and lots of standalone telephone and internet lenders. This means that lenders are being forced to shed costs and cut margins in order to preserve their market share - all of which means cheaper loans for you and me.

Despite making reductions in the cost of borrowing in addition to the previous cut in interest rates, the high competition has meant that lenders have already reacted to the MPC decision. Many of Britain's biggest mortgage lenders have already chopped their rates on the back of Thursday's news. The Halifax Group, Nationwide Building Society, Cheltenham & Gloucester, Virgin One, HSBC, Alliance & Leicester, Northern Rock - very few major lenders have failed to follow the downward rate trend. Not all the new rates are available immediately - some borrowers will have to wait until the start of next month to take advantage of the new deals.

With annual mortgage repayments now nearly £500 lower on a £120,000 loan than they were three months ago, this latest reduction in interest rates is sure to provide a further boost to the housing market, which is by no means in the doldrums at the moment.

All the major reports have shown that the housing market has been fairly buoyant already this year, with Nationwide saying this week that prices rose 1.4 percent in March, while Halifax reported a 0.4 percent rise. The number of transactions is also rising and the higher level of activity is also translating into more mortgages being sold. And with the stock market really struggling at the moment, we could see more investors shifting their funds out of equities and into property.

The only logical conclusion that you can draw from this is that the housing market should blossom over the course of this year. Recessionary worries in other areas of the economy may prevent prices spiralling, which is probably good news in the long run, but nonetheless, homeowners should see significant gains in the value of their major asset.

Another effect of the reduction in mortgage rates will be to leave existing borrowers with lower mortgage repayments. This ultimately means more cash in the pocket at the month's end, which usually results in higher spending as Britain is no longer a nation of savers.

Easter is traditionally a huge period for consumer spending on DIY and this year could be one of the busiest on record - the CEBR is forecasting that sales will be more than 12 percent higher than this time last year. If homeowners aren't looking to sell up and benefit from rising prices, the chances are that they will be spending money on home improvements to help them cash in when the time comes and they do decide to move on.