Mortgage brokers and lenders respond to base rate cut

Date:Friday 5th December 2008
Author: Rachel Fletcher

There will be no across-the-board reduction in mortgage rates as a result of the base rate cut, it has been claimed.

Responding to the Bank of England's cut of the base rate to two per cent, Council of Mortgage Lenders (CML) director-general Michael Coogan warned: "It is not realistic to expect [mortgage lenders] all to react in the same way to the rate cut -although where they believe they can cut mortgage rates, they will."

The CML explained that lenders have differing costs of funds and that they are dealing with a number of objectives such as trying to keep rates low for borrowers and high for savers.

Meanwhile, the Association of Mortgage Intermediaries (AMI) welcomed the interest rate cut but said that it was not enough on its own to improve mortgage market lending.

Chris Cummings, AMI director-general, called for the speedy implementation of Sir James Crosby's recommendations for the government to guarantee new mortgage securities.