The Bank of England''s decision to inject cash into money markets could ease pressure on mortgage rates, it has been claimed.

Yesterday, the Bank announced it would offer £10 billion to help banks get through the current credit crunch, with the Council of Mortgage Lenders (CML) suggesting that this could have a positive impact on the London Interbank Offered Rate (LIBOR), the rate at which banks lend each other money.

This rate has been driven up due to the impact of homeowners in the US defaulting on their mortgages, making banks nervous about lending to each other without knowing how much debt each firm is holding.

According to the CML, some mortgages are linked to this rate, meaning that a fall in LIBOR could be beneficial for customers.

Michael Coogan, CML director general, welcomed the BoE move, commenting: "This is good news for lenders and for their customers, particularly those with mortgages linked to LIBOR for whom hefty increases in payments were looming."