Summary
TODAY'S quarter-point cut in interest rates to five per cent is the right response by the Bank of England's Monetary Policy Committee to the credit crunch.
However, it cannot in itself dispel the cloud over the mortgage market. Mortgage lenders should pass the cut on, but they can resist pressure to do so because they are in a seller's market. Mortgage lending is predicted to fall to [pounds]250 billion this year, down from [pounds]360 billion last year. Many lenders are leaving the market entirely. So the remaining lenders, in particular the high- street banks with big balance sheets, can maintain or increase their rates despite the Bank cut.See the full content of this document
Extract
Banks Should Pass On the Cut
That is bad news for new buyers and for the 2.75 million ho...
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