Mortgage brokers: Good and bad news with base rate cut

Date:Friday 7th November 2008

Yesterday's base rate reduction by the Bank of England brings both good and bad news, mortgage brokers firm John Charcol has said.

Spokesperson Ray Boulger said the 1.5 per cent cut to three per cent was "way beyond even the most optimistic expectations".

But he added that the less of the reduction which was passed on to borrowers, the more cuts the Bank of England would need to make in order to stimulate the economy as necessary.

He noted that only part of the cut is expected to be passed on, which was probably a reason for such a large decrease.

Mr Boulger said that fixed rates for loans-to-value of up to 75 per cent have started dropping slowly recently but still seem expensive when considered alongside a three per cent base rate.

He added that he expects tracker mortgage deals to give better value than fixed rates for now.

The Council of Mortgage Lenders has welcomed the base rate cut as a "strong and decisive move".

Director general Michael Coogan said: "What is important is how this feeds through to lenders' borrowing costs", adding that savers' interests needed to be balanced too.