Rate cut won't help borrowers
View PDF | Print View
by: Admin
Total views: 109
Bank of England policy-makers are poised to cut interest rates this week, amid growing evidence that cash-strapped consumers are suffering from the credit squeeze; but mortgage lenders are already warning that they may refuse to pass on the benefits to borrowers. The Observer-New Star interest rate predictor, developed by economist Simon Ward, suggests that five doves will clinch the vote for a quarter-point rate cut on the Bank's nine-member monetary policy committee this Thursday, bringing borrowing costs down to 5.25 per cent. But a spokesperson for the Council of Mortgage Lenders said banks struggling to raise funds in the money markets might be unable to pass on the lower rates to their customers. 'I think we have to wait and see. Our members are under real pressure on this. They want to assist their borrowers, and have a good history of doing that; but they have to be mindful of the cost of funds.' More than a fifth of lenders failed to give customers the full benefit of December's rate reduction. Ray Boulger of broker Charcol said: 'I think if anything, this time around, even fewer will pass it on.' As evidence mounts that the economy is slowing, some business groups are demanding more aggressive action. 'We urge the MPC to cut interest rates to 5 per cent as early as is possible,' said David Kern, economic adviser to the British Chambers of Commerce. |
Rating: Not yet rated
Login to vote