Mortgage borrowers seeing "partial pass through" of interest rate falls

Date:Friday 3rd April 2009
Author: Max Freedman

To an extent, mortgage borrowers are benefiting from the reductions in the UK's base rate of interest, it has been claimed.

According to Ross Walker, economist for Royal Bank of Scotland Global Banking & Markets, a "partial pass through" of the reductions has occurred.

He also said that rates charged by lenders on other loans have seen a slight reduction as well.

However, Mr Walker added that mortgage providers and policy makers do not want the entire drop in interest rates to be translated to market prices.

He commented: "You couldn't reasonably have a mortgage based at 0.5 per cent interest rate. It wouldn't reflect risk, it wouldn't reflect the real cost of capital."

Meanwhile, Andy Pratt, chief operating officer at Alexander Hall, recently advised consumers to take advantage of the low interest rates currently available on some fixed-rate mortgages.

He pointed out that such deals were hard to find a couple of years ago.