Interest rates are set to fall at their fastest rate since the 2008 financial crisis, economists have predicted, offering mortgage holders relief from high borrowing costs.

The Bank of England is expected to cut interest rates from 4.5% to 4.25% next week in what would be the second rate reduction this year, having already dropped from 4.75% to 4.5% in February.

Economists are pricing in further rate cuts this year, which could result in them falling by up to 1% over the next six months. This is in response to President Trump’s protectionist trade policies, which Clare Lombardelli, a deputy governor at the Bank of England, has warned could potentially “depress” UK growth.

The rate cuts are set to bring the cost of borrowing down to below 3% for the first time since October 2022.

During the financial crisis, rates fell from 4.5% in October 2008 to 0.5% in March 2009.

Barclays has reportedly said it anticipated rates to fall to 3.5% by September.

Barclays is among a host of well-known lenders that have cut mortgage rates this week by up to 0.25%.

Barclays, HSBC and NatWest have all joining the other big six lenders in Halifax, Nationwide and Santander in offering fixed rates below 4%.